"We don't think it (the recession risk) is a serious near-term concern," Rob Subbaraman, head of global macro research at Nomura, was quoted as saying by an official Chinese media outlet, citing the cushion provided by high household savings, low unemployment rates and strong corporate balance sheets.
But the risk could increase going forward, Subbaraman said, as the financial services group forecasts that the cumulative probability of a US economic recession from now to the end of 2024 is fairly high at between 35 per cent and 40 per cent, with higher risk in the second half of 2023 and 2024.
He said US economic growth is likely to start slowing in the second half of this year due to factors like tightening monetary and fiscal policies and rising commodity prices that impair demand.
He noted that a possible US slowdown could hurt Chinese exporters because they mostly sell goods to US consumers while consumption of goods could cool more sharply than the whole US economy as spending shifts from goods to services as the omicron wave fades.
"I think China is going to be negatively affected by the US slowdown and probably more so than you would realise just looking at aggregate US GDP growth," Subbaraman said.
Signs have emerged that China's export growth could face downside risks. An indicator of manufacturers' new export orders dropped to 41.6 in April from 47.2 in March, pointing to a deeper contraction in export orders, said the purchasing managers index survey released by the National Bureau of Statistics.
Global market jitters over recession risks could also affect Chinese financial markets, experts said. Hu Zhihao, deputy director of the National Institution for Finance and Development, said the global financial landscape could become more turbulent as recession risks for the United States and the world economy have risen.
As the world's second-largest economy, China can withstand the external headwinds by strengthening its internal economic circulation, Hu said.
He called for measures to further boost domestic demand with fiscal support, minimise supply-chain disruptions brought by the pandemic and optimise industry regulations to promote the healthy development of the property and internet sectors.
Fibre2Fashion News Desk (DS)