In the meantime, progress with China’s reopening story would also be promising for the global commodities complex, whose performance is contingent on demand from the world’s largest buyer of natural resources. As China continues lifting its zero-Covid policies this year after starting to ease them at the end of last year, Beijing’s policy environment could make a sharp turn from being a significant downside risk to an upside risk this year.
The Asia Pacific region will likely do better this year than major developed economies like the US or Europe. With inflation already coming down in many economies, ING’s Asia Pacific regional head of research, Rob Carnell, believes there could be some light at the end of the tunnel in the latter part of the year, setting the scene for an improved forecast in 2024.
At a recent briefing, Carnell says he is hopeful that when China’s Covid-19 waves pass, rate policy, currency and other market strains will follow suit in easing — although this could take time. “Official data on this cannot be taken remotely seriously, but it doesn’t sound like it is going well at the moment, and it may be some months before the situation calms,” he says.
