Global Data Pod Research Rap: China deflation and its global spillover

Nora Szentivanyi is joined by China economists Grace Ng and Tingting Ge to discuss our recently published research note examining China’s deflation and its spillover to the rest of the world. China’s lockdowns and re-opening played a significant role in pandemic supply-chain dynamics that are responsible for much of the current slide in global core goods inflation. China’s policy supports have boosted supply more than demand resulting in domestic production running ahead of domestic demand; this imbalance has driven deflation in both domestic and export prices. The slide in China export prices, alongside CNY weakness, is evident in material declines in trading partner import prices. This unexpected development is a potent force aiding near-term global core goods disinflation which we expect to slide towards its pre-pandemic norm in coming months. Unless China’s policy mix changes to support demand more powerfully, there remain downside risks on near term growth and inflation.

 

This podcast was recorded on August 22, 2023.

This communication is provided for information purposes only.  Institutional clients can view the related reports at

https://www.jpmm.com/research/content/GPS-4459110-0

https://www.jpmm.com/research/content/GPS-4483333-0

https://www.jpmm.com/research/content/GPS-4468395-0

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