Welcome back, readers. I’m Phil Rosen, reporting from New York. 

Today, we’re talking macro. China’s growth slowdown is sending ripples across the world, though the repercussions are varied based on where you look. 

This morning, I’m breaking down what you want to know about how the world’s second biggest economy moves the world’s currency and commodity markets.

Here we go.

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1. China’s economy is faltering and global markets have noticed. Beijing is navigating a slew of headwinds, including COVID-19 lockdowns and issues across property and labor markets, according to Bank of America. 

“Meanwhile, unfavorable demographics and a low return on investment after years of rapid infrastructure development pose structural challenges to growth,” analysts wrote in a Friday note.

For the US, China’s economic weakness is a mixed bag. 

Thanks to an aggressive Fed, the yuan has weakened roughly 8% against the dollar over the past year — and that means it can help ease inflation in the US. 

BofA noted that a 10% appreciation in the dollar lowers personal consumption expenditures inflation by about 0.4%. 

But at the same time, if China’s pandemic lockdowns persist for much longer, the US could see fresh supply-chain disruptions, which ultimately could add pressure to US goods inflation. 

Meanwhile, China’s slowdown has less impact in Europe because the continent’s focus remains on the energy crunch and Russia, analysts noted. 

But Latin America has significant exposure to China, with Chile sending 40% of its total exports there, while Brazil and Peru each send about 30% of their totals. 

“On the positive side, lower commodity prices are helping inflation to slow down this year from a peak around 12% to 6.5% by year-end,” BofA said. 

“On the negative side, they affect Brazil’s fiscal position and trade balance. Therefore, the lower growth in China is negatively impacting Brazilian exports and growth — recall that China represents almost a third of Brazilian total exports, the equivalent of around 5% of the country’s GDP.”

What do you expect to happen next for China’s economy? What would prolonged COVID-19 lockdowns mean for global economies? Email prosen@insider.com or tweet @philrosenn.  

In other news:

Federal Reserve Chair Jerome Powell

2. US stock futures, cryptocurrencies, and oil prices fell early Monday, as investors brace for the Fed, Bank of Japan, and Bank of England’s rate decisions this week. Meanwhile, the London Stock …read more

Source:: Business Insider


Here’s how economies around the world are reacting to China’s economic slowdown.

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