Growth in the Chinese economy is expected to be a key contributor to global growth in 2023. In its January release of global growth prospects for 2023, the International Monetary Fund adjusted their views on global economic growth from 2.7% in October 2022, to 2.9%, largely underpinned by an improvement in Chinese growth prospects from 4.4% to 5.2% for 2023.
The features underpinning current growth in China are however likely to result in more modest growth than in previous economic recoveries (2008 and 2015). It is also likely to have a smaller global effect compared to previous booms.
Will Chinese economic recovery
serve as an injection for global growth in 2023 and beyond?
The reason for this is centred around the type of spending
that is anticipated as China emerges from lockdown. Over the past three years, household savings have increased substantially. The figure below shows what Chinese savings in 2022 was compared to what they would have been if a trend savings rate was applied over the past 10 years. In this regard, analysts estimate that excess savings in China have amounted to USD 2.5 trillion during COVID.
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