StanChart chief says China’s economy will be ‘on fire’ in second half of 2023

The Chinese economy will be “on fire” in the second half of 2023 due to the divergence of the economic performance of the East and the West. Standard Charter President Jose Viñals.

This Reopening the Chinese economy After several years of stringent “zero Covid” measures, it has revived sentiment among economists that the global growth and inflation picture may be less bleak this year than initially feared.

OECD Secretary General Mathias Cormann Earlier this week, he said the reopening was “overwhelmingly positive” in the global fight to combat very high inflation.

China’s GDP grew just 3% in 2022, official figures announced earlier this week, the second slowest growth rate since 1976 and well below the government’s target of around 5.5%. However, shorter-term data point to a faster-than-expected recovery due to the easing of pandemic-era measures.

Reopening was difficult, China reports massive increase in Covid cases and deaths in the past weeks.

While Viñals acknowledges the human cost of the rising death toll, the resulting widespread immunity Some analysts have suggested that the situation unfolding in conjunction with the reopening of borders will allow the economy to “surprise upside” in 2023.

“I think the Chinese economy will catch fire in the second half of the year and that will be very, very important for the rest of the world,” he told CNBC at the World Economic Forum in Davos. Switzerland.

“This comes not only from the reopening of Covid, but also from the government’s support with fiscal policy, support for the real estate sector which is extremely important, and also reducing the intensity or regulatory pressure of regulation. Sectors like the IT sector, so all of this is going to be very important positive things. I’m thinking.”

Emerging market boom

Besides the contrast between global economic performance in the first and second half of the year, Viñals also suggested that in 2023 there will be a divergence between the eastern and western hemispheres as Asia and the Middle East drive global growth.

Despite Federal Reserveaggressive monetary tightening and strong United states dollar In 2022, emerging market economies have largely performed surprisingly resilient.

Structural improvements that help insulate many emerging economies will also enable them to thrive in the years to come, Viñals said.

“Not all emerging markets are created equal, and they have very different risks to the high dollar and high interest rates in the US, and those who are more negatively impacted are those with high foreign currency debt,” he said.

“There are certainly a number of low-income and lower-middle-income countries facing challenges, but for the vast majority of emerging markets, things are going well.”

In particular, he pointed to India and some Southeast Asian countries, which were subject to volatility during the “taper tantrum” in 2013, when sharp market sell-offs prompted the Fed to slow the pace of Treasury sales.

“I think that the improvement in the fundamentals of emerging markets, the improvement in the accumulation of foreign exchange reserves, better economic policies, better governance, all of these help to attract or maintain confidence, and I think that’s a big plus for them,” he said.