Australia reportedly anticipates a significant impact from the sharp rise in Covid-19 cases in China on global supply chains and is therefore keeping a close eye on the situation, according to Treasurer Jim Chalmers.

In a radio interview on Wednesday, Chalmers stated that a huge strain on the Chinese workers as well as considerable pressure on supply chains is expected. As a result, the world economy will be badly affected, and Australia will not be immune from that either.

The number of covid cases has increased dramatically after China abandoned its stringent zero-Covid rules that let the virus spread. It has led nations, including the US and Australia, to implement restrictions on Chinese tourists.

China is Australia's largest trading partner, and it is also one of the developed economies with the most exposure to China.

According to Chalmers, the state is closely watching what's unfolding with the supply chains that are affected and will be affected by this Covid wave. Although no monetary value has yet been ascertained and the full impact of this disruption remains uncertain, it is anticipated to be significant.

Treasurer Jim Chalmers stated that the Covid-19 wave in China will not be the only threat to the global economy this year, and he expects 2023 to be tough.

According to Mr. Chalmers, the state of the economy in 2023 will be significantly influenced by the ongoing conflict in Ukraine, concerns about a US-led global recession, higher interest rates in Australia and other countries, and extreme weather conditions.

Despite the central bank of Australia raising interest rates to a decade record of 3.1% in order to combat increasing inflation, economists anticipate that the country's A$2.2 trillion (US$1.5 trillion) economy will defy the trend worldwide and avoid a recession.

The Reserve Bank has hinted that additional increases may take place in 2023.

Source credit: https://www.straitstimes.com/asia/australianz/australia-braces-for-supply-chain-hit-from-china-covid-19-surge