Prices inflate as growth deflates

<p>Kia ora,</p><p>Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news forecasts for global economic expansion are being downgraded on the consequences of the Russian invasion, the Chinese slowdown, and the worrying rise in food prices globally.</p><p>But first, China reported that its economy <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829679.html" target="_blank"><strong>expanded at an annual rate of +4.8%</strong></a> in the March 2022 quarter, better than analysts estimates of +4.4% and the +4.0% rate in the prior quarter.</p><p>But this result defied <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829686.html" target="_blank"><strong>electricity production</strong></a> that actually shrank marginally in March (-0.2%). It also defied <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829684.html" target="_blank"><strong>retail sales</strong></a> that also shrank in March (-3.5%). And <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829680.html" target="_blank"><strong>housing sector activity</strong></a> was unusually weak in the period. Further, <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829683.html" target="_blank"><strong>household incomes</strong></a> were reported up +4.2% and less than the rise in <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829683.html" target="_blank"><strong>household expenditures</strong></a> which were reported up +6.1% over the year-ago equivalent quarters. Their jobless rate rose sharply to 5.8% in March from 5.5% in February and now back near its pandemic highs.</p><p>Chinese <a href="http://www.stats.gov.cn/tjsj/zxfb/202204/t20220418_1829681.html" target="_blank"><strong>industrial production</strong></a> did rise +5.0% above the same quarter a year ago but that was despite their <a href="http://www.stats.gov.cn/tjsj/zxf