China a ‘Bright Spot’ in Gloomy Global Economy
Economic growth in China will likely be a bright spot in the global economy. China’s GDP projections foresee an expansion by 8.1% next year. Meanwhile the global economy faces recession risks due to the COVID-19 pandemic.
On Tuesday, the United Nations Conference on Trade and Development (UNCTAD) said China was one of the new large economies experiencing growth this year.
They expect China’s GDP to grow 1.3% this year before rebounding sharply by 8.1% next year. It contrasted with the estimated 4.3% contraction of the global economy this year.
A senior official at UNCTAD said China’s effective control of the pandemic created greater space for them to manage a strong recovery and expand its domestic economy. However, a lot will depend on their policy choices.
The UNCTAD director of globalization and development strategies, Richard Kozul-Wright, said other major international agencies shared the agency’s optimistic projection on China.
China’s timely and effective policies to restore its economy and social activities have yielded positive results. With its economy back on a steady track to recovery since the second quarter.
The World Bank had previously projected that China’s economic growth would rebound to 7.9% next year. The Organization for Economic Cooperation and Development forecast in its latest report said that China’s GDP growth forecasts to reach 8% in 2021.
Economists said China would continue to see robust economic recovery for the rest of the year. Especially following the stronger-than-expected rebound of August’s economic activities.
According to economists at USB Securities, China’s exports are expected to maintain a mild growth rate. The growth of infrastructure investment will continue to be robust. Social retail sales may also see a steady rebound.
Economists forecast that China’s GDP growth in the third and fourth quarters will bounce back to between 5.5% to 6%.
External risks and uncertainties could still threaten China’s economic recovery
However, experts warned that external risks and uncertainties could threaten China’s economic recovery. Especially as the COVID-19 pandemic still threatens people’s lives, social, and business activities globally.
UNCTAD also said in its 2020 Trade and Development that contraction of the global economy would leave global output at over $6 trillion short of what economists expected it to be pre-pandemic.
It means the world is grappling with an equivalent complete wipeout of Indian, Brazilian, and Mexican economies.
UNCTAD also warned that global trade would shrink by around one-fifth this year. Conversely, the foreign direct investment flows by up to 40%.
It said the world urgently needs coordinated public action for a faster economic recovery in the face of a profound global recession.
