Abbey Road Investment Views, Jan. 2023

Changing policy in China

• China has surprised by suddenly ditching zero Covid

• This points to near-term disruption but recovery later

• US inflation is starting to come down (Focus p2)

• But the US economy is still running hot

• 2022 Regional Roundup (p3)

Overview

China’s abrupt abandonment of its zero Covid policy has important implications for the world economy. Near-term both production and consumer spending will be weak in China for the next few months as a major Covid wave passes through. This could slow world growth and upset international supply chains again, though the effect is likely temporary. The severe

disruption of a year ago is mostly past now. Longer term, if China can learn to live with Covid, it could open the way to a recovery in the economy, though that will also depend on

progress in dealing with property sector weakness.

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Abbey Road Investment Views January 2023

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