China is leading the recent economic deceleration in emerging markets.
“I’m concerned about the next six-to-twelve months; I see some slowing [in China],” says Benjamin Tal, deputy chief of Economy Services.
He adds it’s strange, since the country “has enough ammunition to fight a slowdown.”
Regardless, China’s power is evident.
“China is already doing whatever it takes to achieve this soft landing. It can lower requirements in its planning. It can cut interest rates and they will do it again. It’s telling banks to lend and it has the power to do that.”
China’s system can effectively control overall global economic activity “and we are starting to see it already,” says Tal. “Three-to-six months from now, we’ll get the green light from China and that will provide the boost to the global economy.”
Global GDP growth will be softer this year, at only 3%. But China’s potential, along with that of other emerging markets over the next six years, is huge.
“It’s just a question of timing,” says Tal. “I am concerned about India, as opposed to China where inflation is slowing. India’s inflation is not cooperating and that’s why the Central Bank of India is not cutting interest rates — although it needs to.”