Consumer prices should start to fall this year and the economy could be getting back on track. However, the great unknown of further economic development is China. No one knows what the end of the lockdowns there will do – especially taking into account the fact that the deferred demand in the Czech Republic drove inflation over 15 percent.
In the first part of the program Inside Talks, which is published on Friday, the head of Linet, Tomáš Kolář, draws attention to this.
“We had lockdowns here and there for a week. We like to forget it, but nothing dramatic actually happened in Europe or the United States. Rather, we limited ourselves,” says Kolář.
“However, China shut down for three years – really shut down – and now they’ve released everything. If we see what the deferred demand did in Europe and how it triggered an inflationary wave for us, because it was really just a deferred demand that we suddenly released, the question is what will happen in China,” Kolář says, adding that China’s purchasing power is really large .
“The middle class there has also accumulated funds, and they will now rush to the market,” Kolář explains. In that case, Chinese manufacturers will logically prefer to satisfy domestic demand rather than export, which is always a bit more complicated and risky.
According to a study by Goldman Sachs, China’s relaxation of strict covid-19 policy will not only accelerate the country’s economic recovery, but also support global economic growth.
However, the analysis points out that the reopening of China will also lead to an increase in global inflation, and this indicates a higher demand for commodities, especially oil. Goldman Sachs commodity strategists estimate that Chinese oil demand could rise by at least a million barrels a day, which would boost Brent crude prices by about $15 a barrel.
