China economy at more risk from EU recession than US trade war, economist El-Erian says
- Allianz Group chief economist talks of sizeable risk of European Union recession this year, posing a threat to China, as biggest trading partner
- China, Canada and Mexico have worked out ‘appropriate approach’ to dealing with US trade tariffs, says Mohamed El-Erian
The “sizeable” chance of a recession in the European Union poses a greater risk to the Chinese economy than the ongoing US-China trade war, according to noted economist Mohamed El-Erian.
The EU is China’s largest trading partner and, according to El-Erian, chief economic adviser to the Allianz Group, the world's third-largest financial services company by revenue, has “between 50 and 60 per cent” chance of entering recession later this year or early next.
“The extent to which Europe has slowed has surprised a lot of people,” El-Erian said, noting a range of issues facing the bloc, from Brexit, to a major change in German political leadership, long-running protests in France, upcoming elections in Spain and a new Italian government that is just “finding its feet”. The International Monetary Fund cut its forecast for Eurozone growth this year to 1.3 per cent, he noted, “and I suspect we will go sub 1 per cent quickly”.
El-Erian disagreed with European Central Bank president Mario Draghi’s assessment last week that the chances of a Eurozone recession in the near-term remain “low”.