Both China and the United States, the world’s two largest economies, registered more GDP growth than expected in the first three months of the year. It seems the worries about the health of the global economies were either unfounded or overplayed.
Not so fast, cautions HSBC global chief economist Janet Henry.
Import demand from Beijing and Washington is still low and that means the export-reliant economies of the world are still struggling. Who are we talking about? Europe, for one. The European economy, in particular its biggest contributor Germany, are highly reliant on exports. In Asia, so is South Korea.
While the downturn in world trade reflects a generalized slowdown in global investment and consumer spending over the past year, two sectors have fared particularly badly – cars and electronics,” said Henry.
And those sectors are also the growth engines of Germany and South Korea.
So beware the headline numbers.
Without a broad-based growth, including healthy imports, we might have to wait just a little longer for the global economy to pick up steam, while export-oriented economies continue to be helped along by fiscal stimulus.