According to the recent reports, the chief Asia economist of Goldman Sachs has talked about the growth of China and the risks it currently faces. The chief economist stated that China will most likely grow in the coming months in a moderate way. As per the economist, the country currently faces two major risks that it needs to address at the earliest.
The first factor is that the policymakers are very comfortable and satisfied with the recovery observed so far. Based on this fact, the policymakers have now started pulling back on the policy stimulus to some extent. This statement was made by Andrew Tilton on February 1, 2021 at “Streets Signs Asia”.
Tilton stated that if things continue to get well and better, then there are chances for the country to face some inflation risks.
It is expected of China to demonstrate spectacular numbers for gross domestic products for the first quarter of the year 2021. China currently has the second-largest economy in the entire world and started gaining a surge in the last quarter of the year 2020. The country has shown great growth with respect to GDP as it expanded by 6.5%, which was higher than what was achieved for the same quarter in 2019.
The Chinese GDP growth has surprised the global economist by showing such a significant amount of growth in the four quarter of 2020. The Chinese GDP growth exceeded the expectations of the global economy. In the fourth quarter of 2020, the Chinese economy has emerged as one of the economies that have seen a positive surge.
While the majority of the world’s economy was tremendously affected in a negative way by the pandemic, China has managed to stay in positive figures and exceeded all expectations.
Tilton stated that as the policymakers continue to pull back from stimulus policies, the growth of credit has been slowed. The pullback will also result in fiscal deficits and as a result, the liquidity has also started to tighten.
Apart from the 1st major risk, the 2nd major risk is of even higher concern and may end up becoming the severest for China. The second major risk is the re-emergence of COVID-19 cases in China.
As per the recent reports, local COVID-19 cases have also started emerging in China. It was since March of 2020 that the country had been battling with the pandemic. However, the country managed to bring the COVID-19 pandemic under control in the last quarter of 2020.
Now the country is again facing problems due to the COVID-19 outbreak and it has again started imposing restrictions in order to bring the situation under control.
Now that the country has started stabilizing, another coronavirus outbreak would result in the country’s economy plunging even lower.