IMF to lower global growth forecasts due to Ukraine war and Covid

In the news article, Richard Partington discussed how the International Monetary Fund (IMF) predicted a lower economic growth for 2022. The author discussed the rationale for the low predictions. The lower economic growth is due to the inflation caused by the Ukraine invasion. The war has compromised supply chains and led to higher consumer prices and inflation rates. On top of this, the pandemic has also not stopped compromising world economies. Shanghai, for instance, is locking down to prevent the virus from spreading. It would mean that many factories based in Shanghai would have to stop their operations and compromise supply chains. 

The article did not use speculations and focused on delivering information backed by relevant sources. The publication has hyperlinks that lead to other news articles. When discussing the Shanghai lockdown, it cited another news that covered the event. Thus, it allows readers to read deeper into the topic and verify the claims for themselves. However, the cited news articles are mainly from the same news publication. Thus, they may agree and support each other because they came from the same news publication. The author could have improved its credibility by linking outside sources. 

The article elaborated its message accordingly and allowed general readers to understand the context of the economic challenges. For instance, when saying how Putin's invasion caused rising commodity prices, Partington elaborated on why this happened. He explained the roles of these two countries and how their products are critical in the world's supply chain. He discussed it without using technical and intimidating statements that may lead the readers to confusion. The article also discussed how the Shanghai lockdown could worsen the world economy. It provided a clear explanation of why this lockdown may challenge companies and fuel the rising inflation.

https://www.theguardian.com/business/2022/apr/14/imf-lower-global-growth-forecasts-ukraine-war-covid

Why there are growing fears the U.S. is headed to a recession

In the article, Horsley discussed the fears about the United States entering a recession. He explained that many measures, including more available employment and declining unemployment, may suggest that the economy is strong. However, the Feds anticipate that they could not lower the inflation rate to 2% due to the scarcity of workers and high consumer demands. The impending increase in the interest rates also threatens to push the country into a recession. Horsley later discussed how inflation is not an isolated event in the United States. The pandemic has challenged the world economies. It is, however, up to the Feds to bring a balance by reducing inflation without pushing the country to recession. 

The article did not produce much information that general readers may understand fully. For instance, the article discussed how the Fed planned to increase the interest rates to combat inflation. However, it did not elaborate on how rising interest rates could lower the demand from the consumers and address the alarming inflation in the United States.

The article provided a broad view of the topic, which can be relevant in understanding the interactions between world economies. For instance, it mentioned the Ukraine invasion and considered how it could exacerbate the world economies. It also touched on the shortage in semiconductors and how it impacted consumer prices and inflation. Thus, the author showed a better picture of the world and its economies. The article, by doing so, also emphasized how world economies are ultimately related. 

The author did not speculate and used appropriate evidence in the article. The author cited other reputable and credible sources to support his claims. The author used empirical evidence or statements from experts to build up the argument. It allowed the article to be more credible and the users to read laterally to verify the claims. 

https://www.npr.org/2022/04/13/1092291748/economy-recession-inflation-federal-reserve-interest-rates

"Supply Chain Hurdles Will Outlast Pandemic, White House Says"

     In a report released Thursday, April 14th, White House economists stated that while the pandemic did expose weaknesses in the supply chain, it did not actually create those problems. Modern supply chains have become very vulnerable nowadays, and climate change as well as the increasing number of natural disasters, like tornados, earthquakes and hurricanes, “make further disruptions inevitable.” 

    This information was released in the Economic Report of the President, which is an annual document released by the White House that outlines the economic issues facing the country and how the current administration is hoping to address and fix them. One of the seven chapters in the report was focused on the supply chain issues the global economy is dealing with, and in this chapter, White House economists claim that the practice of offshoring, where manufacturers buy low cost products from other countries, like China, as well as the adoption of just in time manufacturing has created a very efficient supply chain, but one that is also very prone to “breaking down” when there is a shock to the economy, like a pandemic, natural disaster, or a war.

    In the report, the current administration explained that they will continue to look for weaknesses in the supply chain for certain products, like semiconductors and pharmaceutical products, and also hopes to increase American manufacturing through more government purchases, and an increase in investment. These measures hope to create a stronger supply chain that wouldn’t be as easily breakable, but would come with some added costs to manufactured goods, which can be seen as a problem in our already highly inflationary economy. 

https://www.nytimes.com/2022/04/14/business/economy/biden-supply-chain.html 

March’s runaway energy prices and higher food costs could mean hottest consumer inflation since 1981

 With the monthly inflation numbers coming out relatively soon, economists expect that inflation has risen 1.1% this past month.  This is not extremely significant growth, however, the year over year gain is expected to be 8.4% which would be the highest since December 1981.  February also saw a great increase in inflation with a .9% increase from the previous month and year over year gain of 7.9%.  These numbers were the highest since early 1982.  The likely causes of this jump in inflation are food and energy, although the cost of housing has also continued to rise over this period.  Luckily, the high gas prices seem to have broken, as the prices of barrels have fallen to $94 on Monday.  This high inflation will also likely decrease CPI.  Zandi projects a fall of 4.9% by the end of this year.  This is likely due to the Fed being expected to tighten the money supply aggressively in order to calm the high inflation.

Prices climbed 8.5% in March compared to last year amid growing fears of economic slowdown

The inflation surge in the United States picked up speed in March, as prices rose 8.5 percent compared with a year ago. It was the largest annual increase since December 1981, with energy prices spiking because of Russia’s war in Ukraine.

The White House and Federal Reserve have launched several initiatives to try and control the rising prices, but higher costs appear to be everywhere, particularly in consumer staples that most families cannot do without. Gasoline, food, and a range of other products have become markedly more expensive, creating economic strains for households and businesses, and political problems for the government.

The economy is now expected to grow at a slower pace this year, in part because inflation causes families and businesses to rethink certain purchases and potentially decrease consumer spending. The inflation data, released Tuesday by the BLS, showed prices rose 1.2 percent in March compared with February. Price increases for gas, shelter and food were the largest contributors to inflation.

In order to try and arrest the growth of inflation, the Fed in mid-March launched its first rate hike since the pandemic began and penciled in six more for later this year. In the past few weeks, officials have signaled that even more aggressive hikes could come in the next few months.

https://www.washingtonpost.com/business/2022/04/12/inflation-march-cpi/

Lockdowns in Shanghai and other Chinese cities pose a growing threat to the economy

         China’s strong policies to defeat covid have caused big changes to the Chinese economy. China has locked down multiple cities including Shanghai. These lockdowns have dealt a hefty shock to its economy, causing more issues with global supply chains and further growing inflation. 

Small businesses have been hurting a lot as they are being forced to shut down causing them to struggle to generate revenue. Tesla and other big companies with plants in China have also seen a halt in their ability to produce which hurts them too. Trade also has been becoming more expensive as a result of the lockdowns as air freight rates have soared and port delays have grown.

The Chinese government refuses to find a middle ground between a 0 tolerance approach and the approach of just living with COVID. “The Omicron variant is highly infectious, and it has become increasingly challenging for China to reach its ‘zero-Covid’ objectives while most other countries opt for a ‘living with Covid’ approach,” (Ting Lu, managing director and chief China economist for Nomura). Lu believes that China’s policy regarding the virus will affect many sectors poorly and cause many issues for the Chinese and world.

The World Bank now forecasts that China’s economy will grow 5% this year which is lower than last year’s 8.1%. That is lower than China’s goal of growing over 5.5%. Many investment banks believe that the lockdowns and strict policy’s effects on the economy will spillover into the rest of the east asian region.

The Shanghai lockdowns came at a terrible time too where the economy is already struggling. In March, the Caixin Purchasing Managers’ Index (PMI) for services recorded its sharpest decline since the beginning of the Covid-19 outbreak in Wuhan in February 2020. Economists forecast that the April numbers will be even worse as the lockdowns have destroyed domestic demand. Lu believes that the excessive lockdowns have caused individuals to be worn out, unemployed, and underemployed. He also says individuals have drained their saving so much to where they must reduce their consumption.

https://www.cnn.com/2022/04/08/business/china-shanghai-covid-lockdown-economic-impact-intl-hnk/index.html