China's inflation may increase in 2023

In 2009, when China s 4 trillion yuan stimulus helped kick off a recovery from the financial collapse, there is a catch in 2023 - a boost to inflation at a time when the Federal Reserve and other central banks are trying to bring it back under control.

That's why Kristalina Georgieva, head of the International Monetary Fund, said this month that China's pivot from zero-COVID is probably the most important factor for global growth in 2023, but cautioned what it might mean for inflation. What if the good news of China growing faster translates into oil and gas prices going up, which is putting pressure on inflation? She spoke at the World Economic Forum in Davos.

In 2022, Bloomberg Economics forecast an increase in China's GDP from 3% to 5.8% in 2023. Consumer prices could be lifted by close to a full percentage point in the final quarter of 2023 by modelling the relationship between China's growth, energy prices and global inflation. The boost would be closer to two percentage points if China outperforms, with growth surging to 6.7%.

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