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A blessing in disguise



It’s been a calm start to the week as investors weigh up what China’s modest growth target means for the global economy and look ahead to a busy few days.

Markets were unsurprised by the decision to target 5% growth for this year, while not signaling any significant stimulus to boost the economy’s recovery. This may be a smart decision considering how the country has managed to transition from zero-Covid living to it. Policymakers around the globe may also feel a sense of relief.

A turbo-charged Chinese recovery, which would increase demand for many commodities (oil to iron ore) and consequently inflation, was one of the upsides to this year’s inflation risks. So while we may not get the growth boost, we’re probably getting something far more valuable.

It will be interesting to observe if central banks refer to this in the coming months, as they approach the end of tightening cycles and fight stubborn inflation. Jerome Powell could even make reference to it in his testimony before Congress in the coming days.

These aren’t the exciting affairs that they are made out to be. But this…

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