19 Aug 2015
A debt-laden China to pave the way for another recession – Morgan Stanley
FXStreet (Mumbai) - The economic slowdown in the world’s second largest economy, China, may become the driver of the next global recession, according to the head of emerging markets and global macro at Morgan
Stanley Investment Management, Ruchir Sharma.
Key Quotes:
"China's debt as a share of its economy increased by 80 percentage points between 2008 and 2013 and currently stands at around 300%, with no sign of abating,"
Foreign reserves have declined from $4 trillion to $3.65 trillion over five quarters, with "around half of that 350 billion decline represented hot-money outflows, which is largely money being taken out by Chinese companies and residents,"
"This vote of no confidence put downward pressure on the economy and, along with falling export growth, forced the surprise devaluation."
“Global growth is still stuck in the 2%-2.5% corridor; the world is one shock away from another global recession.”
"A debt-laden China is now the critical link, and another one or two percentage point decline in its growth rate could provide that shock."
Stanley Investment Management, Ruchir Sharma.
Key Quotes:
"China's debt as a share of its economy increased by 80 percentage points between 2008 and 2013 and currently stands at around 300%, with no sign of abating,"
Foreign reserves have declined from $4 trillion to $3.65 trillion over five quarters, with "around half of that 350 billion decline represented hot-money outflows, which is largely money being taken out by Chinese companies and residents,"
"This vote of no confidence put downward pressure on the economy and, along with falling export growth, forced the surprise devaluation."
“Global growth is still stuck in the 2%-2.5% corridor; the world is one shock away from another global recession.”
"A debt-laden China is now the critical link, and another one or two percentage point decline in its growth rate could provide that shock."