Global economic outlook darkens as war and pandemic cast a veil

“Demand will and should be dampened by the removal of monetary accommodation,” she said. “And that has become very clear in recent months.”

In addition to war, the pandemic and rising interest rates, China is facing a slowdown in its real estate sector, and the Brazilian economy could be hurt by political unrest related to the upcoming elections, she said.

New data shows China’s economic growth and retail sales are flagging as the government imposes sweeping lockdowns to eradicate the coronavirus. As of April 11, 87 of China’s 100 largest cities had imposed some form of movement restriction, according to Gavekal Dragonomics, an economic research firm.

The restrictions are again disrupting global supply chains for electronics, auto parts and other goods, and curbing Chinese imports of oil, food and consumer goods. China is the world’s largest oil importer, and slowing demand there caused the International Energy Agency last week to revise down its forecast for oil demand growth this year. to 1.9 million barrels per day, compared to an increase of 5.6 million barrels per day last year.

The Russian invasion of Ukraine and the sanctions imposed to punish Moscow also threaten to tip European economies into recession. Last week, forecasters from Germany’s leading economic institutes projected that a complete European ban on Russian energy imports would cause German output to contract by 2.2% next year and push inflation to 7.3%, a record high for post-war Germany.

Global trade growth is also expected to slow this year. The World Trade Organization is waiting world merchandise trade volumes will rise 3% this year, down from a previous forecast of 4.7%. But depending on how the pandemic and war unfolds, trade growth could be as low as 0.5% or as high as 5.5%, Ngozi Okonjo-Iweala, the organization’s chief executive, said during a briefing. a press conference last Tuesday.

The group expects global trade growth to rebound to 3.4% next year, although those estimates are also subject to change.

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