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Stephen Roach said China is ready for a weak rebound, and a recession cannot be ruled out

Stephen Roach said China is ready for a weak rebound

July 18, 2022: -China’s economy is ready for a weak recovery, and a recession cannot be ruled out, warned economist Stephen Roach.

“It’s tempting saying that there’ll be a repeat of what we experienced in 2020 when the economy collapsed virtually 7% year-on-year rate, and four quarters later, was increased at 18%,” said the former Morgan Stanley Asia chairman on Friday.

“But I think it’s that that will be the case,” he told CNBC, adding that the recovery trajectory will be “far more muted.”

Roach, now a senior at Yale University, said that there could be monetary tightening and downward pressure on the global economy “as central banks increase interest rates to answer a much worse, more intractable inflation problem than envisioned.”

China did not see a “clean snapback,” said Roach, where it bounced back from a first-quarter contraction to an increase in the second quarter after the pandemic reached 2020.

“We’re talking regarding these a few variants of Omicron which reappeared.”

Shanghai, China’s biggest city by GDP, was locked down in April and May. Beijing and other parts of the country imposed a few Covid restrictions to contain the spread of the new omicron BA.2 variant.

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