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On Monday, trade data will reveal the extent of the damage. Chinese export growth is likely to have slowed to its slowest rate since June 2020, while imports are likely to have contracted for a second month, indicating weak consumer spending as millions of residents in Shanghai and elsewhere were confined to their homes.
As the world's largest manufacturer, China's disruptions are weighing on the global economy and adding another risk to the inflation picture. The government is attempting to restart production in Shanghai, where the majority of the population has been under some form of lockdown for more than five weeks. Nonetheless, many foreign businesses report that they are still unable to resume operations.
Early trade indicators are not promising. South Korean exports, a barometer of global demand, increased by double digits in April, but shipments to China fell, implying that China's slowdown is the result of its own Covid restrictions.
“Production and delivery disruptions may have a negative impact on shipments.” In April's official PMI data, the output and delivery components deteriorated to their lowest levels since the nationwide lockdown in early 2020.
China's inflation data will also be scrutinized as food and other goods shortages, exacerbated by lockdowns, drive up prices. Consumer price growth is expected to accelerate, while factory gate inflation is expected to remain high in April.
The Communist Party's top leaders have promised more stimulus in order to meet this year's economic growth target of 5.5 percent. Credit data for April, which are due this week, will show whether monetary and fiscal stimulus have had the desired effect of stimulating borrowing.
In other news, the United States may see another spike in inflation, the United Kingdom's first-quarter GDP data may already point to a slowing economy, and Mexico's central bank is expected to raise interest rates again.
Asia
Aside from China, Asia's highlights include a rate decision in Malaysia on Wednesday, where officials are expected to deviate from the global tightening trend as inflation remains low and downside risks to the economy remain.
Following the surprise hike by the Reserve Bank of India, April inflation data will be scrutinized on Thursday as economists reassess their policy forecasts.
On Monday and Thursday, Indonesia and the Philippines release first-quarter GDP figures. Wage and household spending data for Japan will be released early next week.