According to an analysis, the Chinese economy, which succeeded in a V-shaped rebound, will continue to grow at an 8% level next year. This is the result of an improvement in the global economy and a full-fledged recovery in domestic consumption. It is an observation that the strong yuan will also continue for the time being. Japan, which recorded a large negative growth, is expected to show 2-3% growth next year.
It is predicted that the Chinese economy will grow 8% next year. Shutterstock
On the 27th, the Bank of Korea released a’Overseas Economic Focus’ report containing such a prospect. According to this, China’s gross domestic product (GDP) growth this year was 0.7% by the third quarter, less than the previous two years, which recorded 6.7% and 6.1%, respectively. This is the aftermath of the 1Q growth rate dropping to -6.8% due to the spread of the novel coronavirus infection (Corona 19). However, it is showing a sharp recovery at 3.2% in 2Q and 4.9% in 3Q. Although the shock was great, the rebound is also fast. Production has entered the normalization stage from 2Q, and this effect is expanding to domestic demand, including consumption.
This trend is expected to continue next year. An official from the BOK said, “We will record high growth thanks to the recovery of the global economy, recovery in consumption, expansion of investment in manufacturing, and the base effect of the previous year.” The strategy is expected to gain momentum.” The International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), and the Chinese Academy of Social Sciences project growth rates in China next year at 8.2%, 8.0% and 7.8%, respectively.
However, the possibility of trade and diplomatic conflicts with the Biden government and excessive debt from local governments and private sectors are burdensome. The strength of the yuan is expected to continue next year. An official from the BOK said, “The faster-than-expected economic recovery, the maintenance of the trade balance, and the expansion of the dollar inflow are acting as strong factors,” he said. “Considering the possibility of reproducing the US-China conflict, the rapid appreciation will be limited.” Amid the steep economic recovery, there may be a government-level move to normalize the stance of expanding monetary and fiscal policy.
Japanese companies’ performance peaking in 2017… It seems to take time to normalize
Japan is expected to record a growth rate of 2-3%, exceeding its potential growth rate. The -5% fall is inevitable this year, but it means that it could rebound next year. An official from the BOK said, “In terms of expenditure, the sluggish facility investment will continue for a while, but private consumption will remain on the rise and exports will also show an increase.”
However, the swaying growth of companies can put a burden on the economy as a whole. Japanese companies’ sales fell for the second consecutive year after reaching a record high (1544 trillion yen) in 2017. In the second quarter of this year, hit by Corona 19, the biggest sales decline since the 2008 financial crisis. Profitability was also on the decline after peaking in 2018, but this year it was extremely sluggish. An official from the BOK said, “It will be greatly affected by whether and when the Corona 19 situation improves, but it will take quite a while to normalize immediately.”
Reporter Jang Wonseok [email protected]