Economists skeptical of quick recovery

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(Xinhua)
Updated: 2009-08-14 14:17

BEIJING: A majority of world economists said it will take at least three to five years for the world economy to recover to the level seen before the worldwide financial crisis but many said they expected China to emerge first from the downturn.

Out of 80 economists surveyed by the Beijing-based Global Times, 51 participants expected the global economic recovery period to last three to five year, the paper reported on Friday.

Nineteen analysts were among the most optimistic, saying two years should be long enough. And nine speculated that global markets will still be showing effects for at least five years.

Ding Yifan, a Chinese scholar at the Development Research Center of the State Council, said the finding indicates that most economists are cautiously optimistic about the future economy.

In the midst of the worldwide economic downturn, the Global Times spent almost two months surveying 80 economists across the globe, covering five from international institutions such as the International Monetary Fund (IMF) and the World Bank, 19 from the United States, 35 from Asia, 18 from Europe, two from Oceania and one from Africa. Two of them are Nobel Economic Prize laureates.

The interviews featured three questions: How long will it take for the world economy to recover to its previous level before the financial crisis? Which economy or country will take a lead in climbing out of the crisis first? How long will it take China's GDP growth to overtake that of the United States?

OVERTAKING UNITED STATES?

Out of the 80 economists surveyed by the Beijing-based newspaper, 66 said China will rise as a global leader in its recovery from the financial crisis, and 37 said it will take China about 20 years to overtake the United States in terms of gross domestic product (GDP).

Ten 10 of those polled said the US was likely to recover first. Most signs point to China leading the recovery charge, according to a vast majority that included American economist Homi Kharas.

Kharas, former chief economist for the Asia division of the World Bank, and also a scholar at the Brookings Institute, said judging from China's economic capacity, it has become the undisputed leader of emerging economies.

"Although the external environment is quite bad, China has a strong capability to defend against the storm with proper internal policies," said Zhou Shijian, a senior researcher at the Research Center of the Sino-US Relations at the Tsinghua University.

But Zhou also raised concerns about the development of the Chinese economy, saying most economists have been too optimistic.

"Several elements, such as resources, the environment and populations, will combine to determine the development of the Chinese economy," he said.

Liu Ligang, chief economist of the Bilbao Vizcaya Argentaria Bank (BBVA), said there is no doubt China will recover after the global financial crisis, thanks mainly to the country's total economic output, backed by its stock market.

He said China should focus on solving an imbalance in its economic structure, as well as aim to raise the average income of its people to prevent becoming a wealthy country full of poor people.

China should also seize this opportunity to adjust its economic structure urgently, in order to embark on a new economic growth path, said Ardo Hansson, lead economist for the World Bank in China.