China’s Lackluster Recovery Dampens Global OutlookChina’sLacklusterRecoveryDampensGlobalOutlook

A lackluster recovery in China threatens to dampen growth prospects for a global economy already on unsteady footing, adding to the uncertainty dotting the investment landscape. Thus far, the Chinese economy has fallen short of rosy forecasts that suggested it would benefit from a burst of consumer and business activity as the pandemic moved further into the rear-view mirror. Over the last week, economists have lowered growth forecasts for the year, China’s central bank has cut key interest rates, and expectations have risen that China will roll out additional stimulus measures to accelerate its recovery. Meanwhile, growth is under pressure in other parts of the world amid higher rates, inflation and tightening credit conditions.

China’s sputtering growth leaves the global economy without the familiar engine to pull it forward amid lingering recession concerns throughout much of the world, PGIM Fixed Income says in a new post on The Bond Blog. China faces moderating growth in the years ahead, potentially bringing its pace of expansion more in line with developed markets. By contrast, two things are unlikely to change: China’s manufacturing prowess and the US dollar’s status as the world’s reserve currency.