There Is A Good Chance That China Will Drag the World Into a Recession, Says Economist

In an analysis published this week, the New York-based bank’s chief economist, Willem Buiter, said there is a 55 per cent chance of some form of global recession in the next couple of years, most likely one of moderate depth and length.

Unlike the U.S.-driven international slumps of the past two decades, this one will be generated by sliding demand from emerging markets, especially China, which has surged in size to become the world’s No. 2 economy.

“The world appears to be at material and rising risk of entering a recession, led by EMs and in particular by China,” wrote Buiter, a former U.K. policy maker.

Among reasons for worry is his view that in reality China is already growing closer to 4 per cent than the government’s goal of about 7 per cent targeted for this year. A shallow recession would likely occur if expansion slowed to 2.5 per cent in the middle of next year and stayed there, he said.