The resurgence of Covid-19 infections in South-east Asia and China in recent months has caused severe disruptions to shipping and logistics, as well as industrial production, leading to renewed economic slowdowns in the region. Last month, China shut down a terminal at its Ningbo-Zhoushan port - the third-busiest in the world - after a single worker was infected. This followed the closure of the Yantian port in Shenzhen for several weeks in May. Many vessels have had to be diverted to other ports, which have also become congested. Even when terminals are functioning, they have been operating at below normal capacity because of stringent restrictions on the number of workers and regulations on the loading and unloading of cargo. As a result, ship turnaround times have increased, leading to traffic jams at ports, long delays in shipments, disrupted supply chains, and shipping costs that are up to three times as high as they were a year ago.

The spread of infections in Chinese cities has also affected economic activity. China's zero-Covid-19 policy has meant that even small outbreaks trigger stringent lockdowns and travel restrictions. Several industries have been affected, not only in manufacturing and logistics but also in areas such as transport, accommodation and entertainment. As a result, China's Purchasing Managers' Index (PMI) for services - a gauge of the level of activity in which any reading below 50 indicates a contraction - came in at 47.5 last month, the lowest since the height of the pandemic early last year. The composite PMI for manufacturing and services was 48.9.