China to lead world economic growth in 2019, 2020: Report

OSLO - China is expected to lead an increase of global economy by 3.5 percent in both 2019 and 2020, online newspaper E24 reported on Thursday.

"The growth will continue to be lifted by emerging economies with China at the forefront," Knut A. Magnussen, senior economist of Norway's major investment bank DNB Markets, was quoted as saying.

China's gross domestic product (GDP) is expected to have a growth of 6.3 percent in 2019 and 5.9 percent in 2020, but there is a big uncertainty surrounding the Chinese economy, the report said.

This, according to DNB Markets, might be explained by weaker consumption last year, possible break of the housing market as well as the trade war with the United States.

"Emerging economies except for China will be able to grow by up to four percent in both years, while the United States and the Eurozone will continue to pull global growth down," Magnussen said.

Despite the fact that DNB Markets' economists believe both the United States and the Eurozone will have a positive development in 2019, they take into account several hazards that can worsen the state of the world economy.

These risks include US wage growth and inflation, trade war, possibly increased oil prices, as well as the advancement of populism, coupled with increased pressure on political institutions.

Meanwhile, world economy will expect next downturn in 2021, investment bank said.

Both China and the Eurozone might experience larger economic downturn due to expected downturn for the US economy in 2021, partly due to a historically high debt in US companies, the report said.

DNB Markets, however, states that the downturn in the global economy will be "moderate" because the economic imbalances in the US and Europe are now considerably smaller than before the financial crisis in 2008, particularly when it comes to the household and the housing market.

"Banks are also significantly better capitalized than before the financial crisis," Magnussen said.

DNB Markets pointed out that central banks, with the exception of the US Federal Reserve, will have very little ability to counter a setback by cutting key interest rates and that the global downturn will continue to worry the authorities.