Chinese President Xi Jinping recently called for an “all-out” effort this week to boost the world’s second-largest economy through infrastructure investments, signalling growing internal concerns about China’s growth prospects.
That may not be enough to reach its stated 5.5% GDP target if lockdowns stemming from the country’s zero-COVID policy remain in place beyond April, according to one analyst.
China’s economy grew at a rate of 4.8% in the first quarter, beating expectations, b the country has struggled to contain its worst outbreak of the coronavirus since the beginning of the pandemic.
The lockdowns have brought Shanghai, its largest city and financial capital, to a crawl. Factory shutdowns and a slowdown at the world’s largest port have only increased pressure on the Chinese government to reassess its stringent zero-COVID policy.
And over the weekend, a spike in COVID cases in Beijing prompted officials to implement limited lockdowns that led to panic buying across the capital.
It looks like a rocky period ahead for China and for sure, this will have a global knock-on effect.
In other news, Australian policy makers face a political challenge on whether to raise interest rates in the middle of a highly charged election campaign or hold off until June and take the possible criticism for ducking a tough call.
Energy ministers from European Union countries hold emergency talks on Monday, as the bloc strives for a united response to Moscow’s demand that European buyers pay for Russian gas in roubles or face their supply being cut off.
Russia halted gas supplies to Bulgaria and Poland last week after they refused to meet its demand to effectively pay in roubles.
Those countries already planned to stop using Russian gas this year and say they can cope with the stoppage, but it has raised fears that other EU countries, including Europe’s gas-reliant economic powerhouse Germany, could be next.
For the US, major attention will be given to Wednesday’s Fed verdict and Friday’s US Nonfarm Payrolls (NFP). Should the Fed disappoint markets, the odds of witnessing further downside of the DXY can’t be ruled out. On the contrary, the further upside of the greenback hinges on how strong the policymakers feel for the balance-sheet normalization and the future path of rate hikes, as well as Friday’s jobs report.
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