Policymakers from China, India, to Europe are scrambling to deal with power shortages which have stoked concerns on inflation and the world’s post-pandemic economic recovery. Energy costs have surged to record highs in Asia and Europe and in the past few weeks.
According to some economic data, Japanese wholesale inflation climbed to 13-year highs in September, British consumers slashed spending, and car sales in China dropped 20%. The IMF lowers growth projections for the US and other major industrial nations, citing pricing pressures and supply chain disruptions. Global stock markets saw a third straight day of sell-offs amid fears that rising energy prices would slow down global economic growth.
The power crunch is expected to last through the end of the year in China, crimping the recovery in the world’s second-largest economy. On Tuesday, Beijing said it would allow coal-fired power plants to hike prices, its boldest step in reforming its power sector. The move is expected to encourage power generators to boost their output.
In Bangalore, India’s tech industry hub, residents faced scheduled blackouts of more than ninety minutes in the afternoon. However, the city’s power provider said the outages resulted from work to lay underground power cables, not supply shortages. New Delhi has allowed power producers to import up to 10% of their coal requirements amid a steep surge in power demand, a move that can boost already high global coal prices.
