Stephen Roach, chairman of Morgan Stanley Asia, says the current globalized recession will be worse than even he foresaw last year.
“We’ve got a simultaneous recession in the U.S., Europe, and Japan,” Roach told Bloomberg TV. “We’ve never seen that before.”
Experts anticipate that the U.S. economy will shrink by 3 percent this quarter.
“The recession will be longer and deeper than people think,” Roach says. “Recovery will be very weak.”
Developing economies in Asia are suffering, too. “Everyone thinks that’s the hot growth segment in the world,” Roach says.
“But there’s not a country in the region that’s not in recession or declining sharply. That region has been hit hard, and there’s more to come.”
While China’s economy grew 6.8 percent year-over-year in the fourth quarter, it actually contracted from the third quarter, Roach points out. That’s because exports slumped amid collapsing foreign demand.
Those exports have grown to account for a whopping 36 percent of China’s economic output.
“It’s premature to say China is in recession,” Roach explains. “But certainly China’s economy will be an awful lot weaker than anyone predicted six months ago.”
Anyone expecting China to lead the world out of its slump is dreaming, he says.
“Most of the juice in China’s growth in recent years is export led. How can you expect its economy to lead the world up if its exports are going south?”
Even China’s propaganda machine admits to clouds on the horizon.
“To be frank, in December, China's economy was hit hard by the global economic crisis,” Ma Jiantong, China's statistics commissioner, told a press conference last week.
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