China is powering through an epic wave of coronavirus infections, setting the stage for a rebound in consumer and business activity that could prevent the global economy from tumbling into recession.
Indeed, the global economy’s other main engines are far from firing on all cylinders. The U.S. economy, despite a strong end to 2022, will struggle this year as higher interest rates bite, according to the World Bank’s latest forecast. Europe is in recession, and Japan is projected to eke out just a 1 percent growth rate., the World Bank forecasts growth of 4.4 percent this year, and some private estimates are even higher. Goldman predicts a 5.2 percent gain.
Nearby destinations such as Thailand and Hong Kong are the immediate beneficiaries. But American tourist attractions also are anticipating the return of the Chinese. That’s an impressive increase. But the total is still just a fraction of the more than 3 million who arrived annually in the pre-pandemic years. And the industry does not expect a recovery to that level until 2026, according to Geoff Freeman, USTA’s president. Visa approvals and required coronavirus testing also will keep international travel from rebounding as quickly as domestic journeys.
Some analysts worry that a resurgent China will consume more oil, driving up global prices, making inflation worse, and forcing the Federal Reserve and other central banks to keep raising interest rates.Bank of America expects a barrel of Brent crude, the global benchmark, to reach $110 in the third quarter this year, up from around $80 today.
Luxury retailers also expect to benefit from higher Chinese sales, within China and elsewhere. The stock of Louis Vuitton’s owner, LVMH Moet Hennessy Louis Vuitton, has gained almost 13 percent since Beijing scrapped its covid restrictions Dec. 7.Still, China is emerging from a period of troubling weakness. Last year’s 3.2 percent annual growth rate was the lowest in decades, excluding the pandemic year of 2020.
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