Why slower growth makes sense for China paid
Justin Leverenz, Director of Emerging Market Equities, sits down for a Q&A to discuss the implications of Chinese slowdown on emerging markets.The slowdown in China has been the main culprit for the recent market panic, but against the backdrop of economic challenges and ongoing trade conflicts, China’s circumstances are manageable.
Even at a slower 5% pace over the long term, China will still account for 30%-40% of global GDP growth, making it the world’s single largest growth engine behind the United States. However, the future drivers in China are going to be quite different from those of the past 30 years. Just a decade ago, China was running a nearly 10% current account surplus relative to GDP, a number that is now closer to zero. This externally fueled supernormal growth is largely evaporating.
Sentiment has turned excessively bearish as investors fled emerging markets, but we believe the emerging market fragility is overrated for many reasons. Current account imbalances across countries have narrowed overall since their pre-financial crisis peak.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments. Forbes and OppenheimerFunds are unaffiliated companies
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