OECD "Welcome China's Easing of Quarantine Measures... Positive for Solving Inflation"

[Asia Economy New York=Special Correspondent Joselgina] Matthias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development (OECD), stated on the 16th (local time) that China's easing of COVID-19 restrictions will play an "overwhelmingly positive" role in resolving the global inflation problem.

[Image source=Reuters Yonhap News]

Secretary-General Cormann appeared on CNBC in Davos, Switzerland, where the World Economic Forum Annual Meeting (WEF, Davos Forum) is being held, and said, "I very much welcome the easing of COVID-19 related restrictions in China."

He explained, "In the short term, this will be challenging with a high possibility of widespread infections, but in the medium to long term, it is very positive in terms of efficient supply chain operation and the resumption of trade demand from China." Earlier, China ended its long-standing zero-COVID policy in December last year, after which the number of COVID-19 infections surged.

This easing of restrictions in China signals a full reopening. CNBC reported that this was also mentioned by some economists as a reason for their recent upward revisions of economic forecasts.

Secretary-General Cormann emphasized, "One of the causes of inflation was a supply shock where global supply could not quickly keep up with demand. If China fully returns to the global market and supply chains operate more efficiently, it will also help reduce inflation." He added, "Clearly, it is overwhelmingly positive."

However, some concerns have been raised that pent-up demand from China could add upward pressure to already high inflation in the short term.

Meanwhile, the Davos Forum, marking its 53rd year, officially began its schedule on the morning of the day with on-site registration of participating organizations. This year, under the theme of 'Cooperation in a Fragmented World,' thousands of political and business leaders from around the world are expected to discuss global issues. Fifty-two top-level officials, including President Yoon Suk-yeol, German Chancellor Olaf Scholz, and European Union (EU) Commission President Ursula von der Leyen, will attend Davos. However, the leaders of the United States and China will not participate.