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China may be heading for the first economic downturn in decades, but what could spell a certain amount of trouble in the Middle Kingdom, might end up being a good thing for the global economy at large. A recent survey from Credit Suisse concludes that a drop in Chinese economic growth could have a positive impact on the world's economy, because of the falling inflation rates that would likely follow.
China's voracious economy has pushed prices on raw materials into an ever upward-going spiral for several years now – prompting inflation to keep on rising – but falling inflation could mean giving the world's central banks the freedom they need to lower interest rates.And a lowering of interest rates might be just what the doctor ordered for getting global growth back on track.
"We think that if China's growth dropped to 9%, it would be good for the global economy," Credit Suisse announced in a press release published on August 1. "That would decrease the pressure of inflation and thereby promote the lowering of interest rates in Great Britain and the rest of the European Union." Credit Suisse's findings is supported by recent figures showing that Chinese buyers also calculate with a GDP growth of around 9% in 2008.
Full story in Danish
News category: China
Published on this site: Aug. 1, 2008
Source:borsen.dk
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