By Swati Pandey and Haidi Lun
China will avoid a massive stimulus injection to boost its post-pandemic economy like the one delivered after the 2008-09 global financial crisis as it has learned its lesson, said Ric Deverell at Macquarie Group Ltd.
China will avoid a massive stimulus injection to boost its post-pandemic economy like the one delivered after the 2008-09 global financial crisis as it has learned its lesson, said Ric Deverell at Macquarie Group Ltd.
“China’s not going to save the world this time,” Deverell, chief economist at Macquarie, said Wednesday on Bloomberg Television in Sydney. “Part of the reason they’re not going to save the world is that they overstimulated in 2010. So they recognize they made a mistake.”
Deverell said China’s economic experience after abandoning Covid Zero restrictions is following a similar trajectory to that of western economies when they reopened. Activity is largely being driven by services, while demand for goods and, in turn, factory activity isn’t as strong. As a result, global commodity prices are unlikely to receive much of a boost from China.
“For the rest of the world, one of the really big things is of course, what happens with manufacturing output and exports are going to be weak because goods demand is falling,” he said.
“For that reason, we think the commodity prices will gradually fall over the rest of this year rather than rally as some of our more optimistic peers have been suggesting.”
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That’s set to impact Australia, which has enjoyed windfall income from surging commodity prices, with the associated boost to tax revenue raising the possibility of the nation recording its first budget surplus in 15 years.
