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China will be the 'most important marginal driver of global GDP,' ex-Goldman Sachs economist Jim O'Neill says

beijingwalker

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China will be the 'most important marginal driver of global GDP,' ex-Goldman Sachs economist Jim O'Neill says

Saloni Sardana
Sep. 22, 2020, 11:33 AM



CNNMoney
  • China's economy will erase all its 2020 losses next year and still record positive growth for this year, ex-Goldman Sachs economist Jim O'Neill told CNBC.
  • He said: "China is well on the way to recovery. It is the country that really matters globally within the BRIC group."
  • O'Neill said other BRIC nations - Brazil, Russia and India - are "considerably behind" in their economic recovery.
  • Visit Business Insider's homepage for more stories.
Chinese GDP is set to end the year in positive territory and the economy will erase all its 2020 losses next year, ex-Goldman Sachs economist Jim O'Neill told CNBC.
The economist who is famous for coining the term "BRIC" in the early 2000s, in reference to Brazil, Russia, India and China, said he believes China's economy will be the "most important marginal driver of global GDP."

"I suspect Chinese GDP growth could actually end 2020 as net positive still," he said. "By end [of] 2021, Chinese GDP growth will have possibly even made up for, not only the losses, but the loss in the trend also."

The world's second largest economy has been ahead of the game in containing the virus and bouncing back from it. It's economy expanded by 3.2% year-on-year in the second quarter of the year and by 11% compared to Q1, beating Reuters economists' predictions.

This came after a 6.8% drop in output in Q1, its first contraction since 1992.

Chinese retail sales rose for the first time this year in August to 0.5% compared to July, while industrial production increased for a fifth straight month.

O'Neill said China is well "on its way to recovery". Even though China was the first to be hit by the pandemic through an outbreak in its Wuhan province, data from John Hopkins University shows it has suffered just over 90,000 infections and less than 5,000 deaths, compared with nearly 7 million infections and almost 200,000 deaths in the United States, the worst-affected country.

"As I have said, China is well on the way to recovery. It is the country that really matters globally within the BRIC group," O'Neill said.

He told CNBC that Brazil, India and Russia, three most heavily hit countries after the US, are "considerably behind" in their road to economic recovery.
India's GDP shrank by 23.9% in the April-June 2020 period.

"I suspect - with a lag - they [BRI countries] will share in the V-like immediate bounce back, partially in Q3, but especially in Q4 2020," he added.

The OECD predicts all G20 countries apart from China will enter recession this year, but it expects global GDP to return to its pre-pandemic level by the third quarter of 2021.

 

beijingwalker

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China to become the world’s economic powerhouse
September 22, 2020 Ian Horswill


China looks on course to be the economic powerhouse of the world by the end of 2020.

With the coronavirus pandemic still crippling much of the world, China’s retail sales for August rose 0.5% from a year ago.

China became the world’s second largest economy behind the US and the number one contributor to world economic growth by 2019 and is destined to be the world’s largest consumer market in 2020.

Jim O’Neill, former chief economist at Goldman Sachs, told CNBC that China now was the most important economy in the world.

“I suspect Chinese GDP growth could actually end 2020 as net positive still,” O’Neill said. “By end 2021, Chinese GDP growth will have possibly even made up for not only the losses but the loss in the trend also.

“I suspect China will continue to be the most important marginal driver of global GDP.”

The Asian Development Bank has also predicted China’s economy will fare considerably better than the rest of the world this year.


China reported that its Gross Domestic Product grew 3.2% in the second quarter of this year, compared to a year ago. It was the only country to see an increase in its Gross Domestic Product in the second quarter of 2020.

Every other country saw their economy contract in the second quarter of 2020: Russia -3.2%, South Korea -3.2%, Indonesia -6.9%, Australia -7%, Japan -7.9%, US -9.1%, Brazil – 9.7%, Germany -9.7%, Turkey -11%, Canada -11.5%, New Zealand -12.2%, Italy -12.8%, Singapore -13.2%, France -13.8%, South Africa -16.4%, Malaysia -17.1%, Mexico -17.1%, Spain -18.5%, UK -20.4% and India -25.2%.

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China has a large market with a population of 1.4 billion. With the coronavirus epidemic sweeping the world, China has become a “safe haven” for global capital.

Data from the Ministry of Commerce show that from January to August this year China’s inflow of foreign capital reached CNY619.78 billion, a year-on-year increase of 2.6%. And China’s actual use of foreign capital in August was CNY84.13 billion, up by 18.7%, a record high this year.

China’s bond market is growing and proving popular with foreign investors because of its comparatively high interest rates.

Statistics show that in the first eight months of this year, China’s export volume reached CNY11.05 trillion, an increase of 0.8% year-on-year, and the cumulative growth rate also turned from negative to positive.

The growth of China’s exports means it has increased its share of global exports and consolidated China’s position in the industrial supply chain.

 

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China to become the world’s economic powerhouse
September 22, 2020 Ian Horswill


China looks on course to be the economic powerhouse of the world by the end of 2020.

With the coronavirus pandemic still crippling much of the world, China’s retail sales for August rose 0.5% from a year ago.

China became the world’s second largest economy behind the US and the number one contributor to world economic growth by 2019 and is destined to be the world’s largest consumer market in 2020.

Jim O’Neill, former chief economist at Goldman Sachs, told CNBC that China now was the most important economy in the world.

“I suspect Chinese GDP growth could actually end 2020 as net positive still,” O’Neill said. “By end 2021, Chinese GDP growth will have possibly even made up for not only the losses but the loss in the trend also.

“I suspect China will continue to be the most important marginal driver of global GDP.”

The Asian Development Bank has also predicted China’s economy will fare considerably better than the rest of the world this year.


China reported that its Gross Domestic Product grew 3.2% in the second quarter of this year, compared to a year ago. It was the only country to see an increase in its Gross Domestic Product in the second quarter of 2020.

Every other country saw their economy contract in the second quarter of 2020: Russia -3.2%, South Korea -3.2%, Indonesia -6.9%, Australia -7%, Japan -7.9%, US -9.1%, Brazil – 9.7%, Germany -9.7%, Turkey -11%, Canada -11.5%, New Zealand -12.2%, Italy -12.8%, Singapore -13.2%, France -13.8%, South Africa -16.4%, Malaysia -17.1%, Mexico -17.1%, Spain -18.5%, UK -20.4% and India -25.2%.

View attachment 672335

China has a large market with a population of 1.4 billion. With the coronavirus epidemic sweeping the world, China has become a “safe haven” for global capital.

Data from the Ministry of Commerce show that from January to August this year China’s inflow of foreign capital reached CNY619.78 billion, a year-on-year increase of 2.6%. And China’s actual use of foreign capital in August was CNY84.13 billion, up by 18.7%, a record high this year.

China’s bond market is growing and proving popular with foreign investors because of its comparatively high interest rates.

Statistics show that in the first eight months of this year, China’s export volume reached CNY11.05 trillion, an increase of 0.8% year-on-year, and the cumulative growth rate also turned from negative to positive.

The growth of China’s exports means it has increased its share of global exports and consolidated China’s position in the industrial supply chain.

That Indonesian second quarter data is wrong. Indonesia contraction is not 6.9 percent as that news suggested but 5.3 %, not different with China first quarter contraction while Indonesia first quarter is positive at around 3 %.

 

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