Evergrande’s collapse could destroy the dreams of many Chinese people getting rich, thereby affecting investment and consumer confidence. It could drag China’s economy deeper down.
Historically, Japan needed a decade to revive the economy after major shocks. In China, recovery could be faster thanks to political efforts. However, it can also take a very long time.
Above Reuters, Andrew Collier, Director of research company Orient Capital Research, said that letting Evergrande go bankrupt is a signal that China is willing to go to the end to end the real estate bubble. This may have a positive impact on the economy in the long term, but will cause difficulties in the short term.
In 2023, net capital flows out of China will be at a record high. The weak state of the domestic economy in 2023 shows that China is losing its ability to attract and retain global capital.
China also added to worries when its population fell for the second year in a row, falling to 1.409 billion people last year.
Leaders have great influence on the world economy.
China’s slow recovery is estimated to have a negative impact on the world economy.
However, investors are placing their trust in two major economies, the US and India.
In fact, even though interest rates are maintained at the highest level in the past 22 years, at 5.25-5.5%/year, American businesses still live quite well. Delays and long loan terms help American businesses reduce shock. The US economy continuously releases surprisingly positive figures.
Contrary to forecasts, the US economy grew beyond expectations and escaped recession spectacularly. According to the US Department of Commerce, the country’s GDP increased by 3.3% in the fourth quarter of 2023, exceeding Wall Street’s forecast of 2%. Before then, most economists were almost certain that the US would enter at least a mild recession.
Consumer demand and the US labor market have been strong throughout 2023, thereby pushing the world’s No. 1 economy forward.
Another bright spot is India. While many economic powers struggle, India stands strong and grows rapidly, with GDP increasing by 6.5% in 2023.
With a GDP of 3,750 billion USD, India has become the 5th largest economy in the world.
According to Japan Times, the Indian economy is poised to surpass the German and Japanese economies in the next few years.
Still following S&P Global, as China’s economy slows, the main growth driver in Asia-Pacific will shift to South Asia and Southeast Asia. The Indian economy will continue to grow in the next 3 years, leading growth in the region. In 2023, India will also surpass China to become the most populous country in the world – a driving force for this country’s economic growth.
It can be seen that while Europe is getting older and China is slowing down, the US is still quite stable and South Asia and Southeast Asia are emerging strongly. Economic development opportunities in these areas are more numerous.
Expanding and upgrading relations with partners such as the US and India will help Vietnam have more growth opportunities. However, the world economy in 2024 still faces many risks, including the impact of the US presidential election, along with political tensions in the Middle East and the Ukraine conflict.
