China's economic problems may have global impact

China's economic problems, including slow growth, high youth unemployment, and a property market in disarray, could have a major impact on the rest of the world, according to a BBC report1. While analysts believe that worries of an impending global catastrophe are overstated, multinational corporations, their workers, and even people with no direct links to China are likely to feel at least some of the effects1. Winners and losers will depend on the situation, as some industries may benefit from China's economic problems, while others may suffer1.

The UK is currently experiencing record gas prices due to a global surge in demand for gas following a cold winter that left gas storage facilities depleted, plus a rebound in post-lockdown energy demand across Asia, according to The Guardian34. The UK's wholesale energy markets have reached record highs in recent weeks, and the situation is expected to worsen as colder temperatures draw in3. The UK is particularly exposed to the energy crisis sweeping across the world, partly due to its dependence on gas for heating and electricity generation and poorly-insulated housing stock5. The British government has announced that it will cap wholesale electricity and gas costs for businesses at less than half the market rate from next month to help relieve the pressure of soaring energy costs6.

BlackRock's fixed income chief, Rick Rieder, believes that the Federal Reserve will hike interest rates again due to stubborn inflation7. Rieder thinks that the Federal Reserve can stop raising interest rates, but it probably won't, and he expects central bank officials to follow through on their stated intent to hike at least one more time before the end of the year7. Rieder believes that the Federal Reserve cannot get inflation back down to its 2% target, partly due to a resurgent labor movement and high energy prices7.