Mark Carney, the Chairman of Brookfield Asset Management, believes that the deceleration of the Chinese economy presents a significant challenge to the global economic landscape. During an interview with CNBC-TV18, Carney asserted that the slowdown in China is not merely a temporary cyclical phenomenon, but rather a consequence of underlying structural issues.

"I have to acknowledge what is going on in China and the slowdown there. The slowdown in China is not a cyclical slowdown, they are dealing with structural issues in the property sector for example. They have worked their way through, but we are going to see probably slower growth for a period of time. So that is one of the headwinds for the world economy," Carney said.

Recent economic data underscores the deepening concerns about China's economic prospects. Bank lending has plummeted to its lowest point in 14 years, deflationary pressures are becoming pronounced, and exports are contracting.

Also Read: Explained: China is exporting deflation and here’s how it will impact India and the world

On August 21, the People's Bank of China (PBoC) took the step of reducing the interest rate on one-year loans by 10 basis points, from 3.55 percent to 3.45 percent, marking the most substantial reduction in three years. However, despite this interest rate cut - the second of its kind this year - Beijing has refrained from deploying the massive stimulus measures used in previous economic downturns.

Carney anticipates that China's sluggish growth trajectory will persist over an extended period.

In contrast, he expresses a favourable and optimistic outlook for the Indian economy. He contends that India stands to gain from digitisation, decarbonisation, and demographic factors. Carney further emphasises that India will emerge as a substantial beneficiary of the reconfiguration of global trade routes and value chains.

"The good news is we have multiple engines of growth in the global economy and India is one of them. So I can be constructive, optimistic and positive about India, US, Canada. India's fundamental growth continues to be attractive due to the export engines and the competitive advantage that India has in data, data processing, data management and software. Secondly there are two rewiring's in the global economy- one in the energy sector with transition and the other is the rewiring of trade routes and value chains. India is an economy that has lots of labour, it has real manufacturing expertise, it is very good at improving manufacturing processes and it has the prospect of big increase in renewable energy. If I am looking at where to set a value chain, then India is an incredibly attractive market," Carney added.

Notably, India's economy recorded a growth rate of 7.2 percent in the fiscal year 2022-23, with economists forecasting GDP growth to range between 6 and 6.5 percent for fiscal year 2024.

First Published:Aug 31, 2023 8:11 AM IST