Investment Institute
Macroeconomic Research

The outlook for China against US or European recession

  • 07 September 2022 (5 min read)

Key Points:

  • Growing stress in the global economy is stoking fears that a sharp slowdown in external demand could be the last straw for the Chinese economy
  • Using OECD ’s data, we estimate the potential shock to China in various slowdown scenarios. In the case of a soft landing – whereby developed economies slow but avoid a recession – China’s export growth would fall to single-digits, reducing its GDP contribution by half compared to 2021. But in two adverse scenarios – varied by the severity of recession – falling export growth could subtract up to 0.7% from China’s GDP
  • We also consider the possible impact of a broader economic slowdown spreading to the rest of the world. Against which, we think, Beijing would likely take aggressive action to cushion the growth shock. However, the policy offsets are unlikely to be complete. Hence, some revision to our growth forecast would be warranted depending on the timing and severity of the shock
  • Finally, we examine how financial markets in China may react to a slowing US economy. The recent dollar strength may continue on safe-haven flows. Chinese equities will unlikely be immune from further US market weakness but the downside could be limited by relative valuations. In the bond market, the current level of US interest rates points to upside risks to Chinese bond yields
Download the full article
Download report (807.07 KB)

Related Articles

Macroeconomic Research

Emerging markets inflation: Characteristics, causes and effects

  • by Irina Topa-Serry , Luis Lopez-Vivas
  • 28 July 2022 (7 min read)
Macroeconomic Research

The Ukraine crisis and its impact on insurers

  • by Arnaud Lebreton , Yolande Poulou
  • 26 May 2022 (7 min read)
Macroeconomic Research

When it comes to market volatility, sometimes it’s best to stay put

  • by Chris Iggo
  • 06 April 2022 (5 min read)

    Disclaimer

    This website is published by AXA Investment Managers Asia (Singapore) Ltd. (Registration No. 199001714W) for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation or particular needs of any particular person and may be subject to change without notice. Please consult your financial or other professional advisers before making any investment decision.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.

    Some of the Services and/or products may not be available for offer to retail investors.

    This publication has not been reviewed by the Monetary Authority of Singapore.