Tight-fisted western economies are more likely to be a drag on the global economy next year rather than slower growth in China, according to CIBC World Markets.
Avery Shenfeld, CIBC’s chief economist, said China will not be immune to global forces, but a lot of the concern over the health of its economy has been overblown. China’s economy is expected to grow 9% in 2011.
“We still see China decelerating but it’s decelerating in part because we’re coming off 12% growth over the prior four quarters, which is a pace that would have been inflationary if it were maintained. But it will also face the impact of a slowing global economy,” Shenfeld said in an interview Wednesday morning.
Fiscal austerity will hit hardest in the west, he said. That’s where the real growth risks lie.
"I think the big sea change we’re going to see from 2010 to 2011 is that the world as we see it today includes a lot of fiscal stimulus, and the world of 2011 will include fiscal constraint,” he said. “That can’t help but slow growth.”
For Western Canada, said Shenfeld, the continued focus on tapping Asian markets could be a buffer against the impact of North American markets coping with fiscal restraint policies.
“It’s good news for Western Canada that Chinese demand is likely to remain quite healthy,” he said. “B.C. is still affected by this overall state of the global economy, but certainly targeting China means you’re targeting one of the economies that is likely to do better in the coming year.”