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Strategies & Market Trends : THE ZERO HOUR -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (27)	10/26/2009 9:04:14 PM
From: kimberley	Read Replies (1) \| Respond to of 130

Will China be able to offset slower US growth? Doing the math Will China be able to offset slower US growth? The US and China make up around 21% and 11% of global GDP (on a PPP basis), respectively. The US consumer, accounting for 70% of US GDP, will remain a drag on US growth over the next few years, while Chinese stimulus measures may just succeed in offsetting both the decline in external demand and its knock-on effect on Chinese domestic demand. It looks impossible for China to offset the expected decline in US growth in the near term. This would have required China to add 4-5 percentage points to its growth rate during 2008-10. However, as China’s economic size continues to increase – rising from just over 50% of US GDP in 2007 to 85% in 2014 – and as its economy continues to grow rapidly, the drag of lower US trend growth on global aggregate growth will diminish. Will China’s contribution to global growth increase? Due to (near) double-digit growth rates, the size of the Chinese economy will continue to increase relative to the US (and all other countries), while the US share of global output will be stagnating. China’s relative contribution to global growth will therefore continue to increase. According to the IMF, China will add a full percentage point per year to global output growth in 2008-10 (and thus account for 50% of global growth), while the US will “subtract” an average of 0.1 percentage points per year from global output during the same period voxeu.org