Economist Stephen Roach warned that China’s economy is set for a weak recovery and a slowdown cannot be ruled out.
Former Morgan Stanley said, “It is tempting to say that 2020 will be a repeat of what we saw, when the economy fell about 7% year-on-year, and after four quarters, was growing at 18% ” Asia chairman on Friday
“But I think it’s unlikely that will happen,” he told CNBC.Squawk Box Asia,” adding that the recovery trajectory this time will be “far more muted”.
His comment came forward China’s second quarter GDP release Which missed expectations, and shows the economy grew by 0.4% in the April-June quarter compared to a year earlier.
Analysts polled by Reuters had forecast a 1% growth in the second quarter.
China’s rebound is going to weaken and hence it will be in the grip of another setback.
Stephen Roach
Senior Fellow, Yale University
Roach, now a senior fellow at Yale University, said there could be greater monetary tightening and downward pressure on the global economy “as central banks respond to the problem of much worse, more difficult inflationary interest than imagined.” raise rates.”
China may not see a “clean snapback”, says Roach came back From contraction of the first quarter to increase in the second quarter after the pandemic hit for the first time in 2020,
“We’re talking about these different forms of Omicron that reappeared.”
Shanghai was the largest city in China by GDP Stop it in April and May. Beijing and other parts of the country also have some COVID restrictions in place to prevent the spread of the new Omicron BA.2 version.
China: ‘In the grip of another shock’
On the prospects of a slowdown in the second half of the year, Roach said it cannot be ruled out for any economy in the world.
“China is like any other economy in many ways. When your recovery is weak, you lack the cushion that enables you to withstand the subsequent shocks,” he said.
“So China is going to have a weak rebound and so it will be vulnerable to another setback. It could be another lockdown. It could be any one of many possibilities that we can’t even imagine.”
He added that “the potential for recession or collapse for any economy – including China – cannot be ruled out in the type of climate that is likely to prevail.”
But unlike other major economies, China does not have an inflation problem, Roach said.
“The CPI has gone up just a little bit but it is the envy of any other major economy… so [China] Clearly there are more basis points to use than choose to do so.”
Earlier this week, China’s central bank said it was closely watching overseas monetary policy tightening, But big interest rate changes did not indicate At home.
“But what we learned from Japan – and China knows it all too well – when you have structural headwinds, and China has a lot, the ability of policy makers to… The potential to boost the economy is limited,” Rode said.