Martin Wolf: China is global economy's biggest risk

Martin Wolf, associate editor and chief economics commentator at the Financial Times, says that the global economy is at the end of a credit bubble that has changed the world, and believes that the greatest risk today comes from China.

"I will do my best to cover in ten minutes everything that is happening in the global economy," Wolf said jokingly at the "Globes" Israel Business Conference, adding, "We are at the end of a credit bubble that has changed the world."

Wolf presented research showing that the expectations in the world's largest economies have been signaling slower growth for years. "As for next year," he said, "the economic forecasts are actually for greater growth than this year. Of course in the developed markets and the major economies the forecasts are more optimistic. In the emerging markets, China among them, the expectations are for a decline in growth next year, and the sharpest growth among these markets in 2016 is expected to be in India."

Wolf added that world demand is weak. "Despite the expansionary monetary policy being conducted in almost the entire world, we are not seeing global inflationary pressures, and that indicates weak demand. Local demand, in the euro bloc for example, is also relatively weak. As for China, that is the biggest story in the world markets. Chinese private consumption is in constant decline, and is at its lowest for several years, and that of course affects the growth of the economy."

Wolf named the biggest risk factor to the global economy today: the slowdown in China and the fear that a financial crisis might develop there, such as would carry over into the euro bloc and drag down the entire world.

Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2015