Posted by: Bruce Einhorn on November 6, 2008
As a business journalist writing about China, you sort of take it for granted that Chinese economy is unstoppable. Of course it’s the world’s fastest-growing country. Of course it has growth rates in the double digits. For China, that’s just normal.
Not anymore. A new report from Credit Suisse says the days of super-fast growth are gone. According to the Credit Suisse analysts, China’s economy is getting hammered by the global downturn and growth may be as low as 5.8% in the fourth quarter. While the Swiss bank expects things to pick up a bit in the second half of next year, it still estimates GDP growth for 2009 of just 7.2%. For China, which needs growh above 8% to create enough jobs for new entrants in the workforce, 7.2% means the country is in a recession.
And the outlook beyond 2009 isn’t much brighter, according to Credit Suisse. “In our view, this round of five consecutive 10%-plus yearly GDP growth…is over,” the analysts write. “We expect 3-5 years of sub-trend growth period….” There’s a chance the double-digit days could return, the analysts write; maybe increased demand from people in the Chinese countryside might power a new boom. For now, though, companies - both local and foreign - that have been pinning their hopes on making big profits from the booming Chinese economy may need to think again.