Unexpectedly Intriguing!
19 April 2022

In just a month, the global economy has gone from showing signs of stalling growth to providing strong evidence the Earth's economy has resumed shrinking.

That's evident from the sharp drop in the pace at which carbon dioxide is increasing in the Earth's atmosphere recorded at the remote Mauna Loa observatory during the last month. The following chart confirms that outcome as measured by the trailing twelve month average of year-over-year change in the atmospheric concentration of carbon dioxide:

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - March 2022

There are two driving factors behind this development. First, Russia's 24 February 2022 invasion of Ukraine has disrupted coal, oil and especially natural gas flows from Russia to the European Union, as many EU nations are boycotting or have implemented economic sanctions against Russian firms.

The second major factor is China's increasing use of lockdowns as the government struggles to prevent the spread of COVID-19 within the country, which is also the world's largest emitter of carbon dioxide. The lockdowns have shut down the country's largest economic center and are now spreading to more regions along with coronavirus infections.

In terms of overall impact for the global economy, we view Russia's invasion of Ukraine as a secondary event, while China's ongoing use of lockdowns clearly represents a continuation of the global coronavirus pandemic recession that originated within the country in 2019.

Update 20 April 2022

Welcome MarketWatch readers! For those interested, we have created a tool to estimate how the change in atmospheric carbon dioxide translates into lost GDP for the planet. Here are the earliest and most recent posts from that series where we've put a number on that impact:

A quick back of the envelope calculation with a net reduction of -0.80 parts per million in the rate at which carbon dioxide is being added to the Earth's atmosphere from December 2019 through March 2022 puts the estimated net global GDP loss at $26.6 trillion. This estimate is likely on the high side of what the IMF and World Bank would estimate.

Reference

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 8 April 2022. Accessed 8 April 2022.

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