China's Slowdown and Rebalancing: Potential Growth and Poverty Impacts on Sub-Saharan Africa

34 Pages Posted: 13 May 2016

See all articles by Csilla Lakatos

Csilla Lakatos

Purdue University - Department of Agricultural Economics

Maryla Maliszewska

World Bank

Israel Osorio-Rodarte

World Bank

Delfin S. Go

Development Prospects Group, The World Bank

Date Written: May 10, 2016

Abstract

This paper explores the economic impacts of two related tracks of China's expected transformation?economic slowdown and rebalancing away from investment toward consumption?and estimates the spillovers for the rest of the world, with a special focus on Sub-Saharan African countries. The paper finds that an average annual slowdown of gross domestic product in China of 1 percent over 2016?30 is expected to result in a decline of gross domestic product in Sub-Saharan Africa by 1.1 percent and globally by 0.6 percent relative to the past trends scenario by 2030. However, if China's transformation also entails substantial rebalancing, the negative income effects of the economic slowdown could be offset by the positive changes brought along by rebalancing through higher overall imports by China and positive terms of trade effects for its trading partners. If global supply responds positively to the shifts in relative prices and the new sources of consumer demand from China, a substantial rebalancing in China could have an overall favorable impact on the global economy. Economic growth could turn positive and higher on average, by 6 percent in Sub-Saharan Africa and 5.5 percent globally, as compared with the past trends scenario. Finally, rebalancing reduces the prevalence of poverty in Sub-Saharan Africa compared with the isolated negative effects of China's slowdown, which slightly increase the incidence of poverty. Overall, China's slowdown and rebalancing combined are estimated to increase gross domestic product in Sub-Saharan Africa by 4.7 percent by 2030 and reduce poverty, but the extent of this varies by country.

Keywords: Social Impacts and Poverty Mitigation, International Trade and Trade Rules, Poverty and Social Impact Analysis, Economic Theory & Research, Economic Growth, Quality of Life & Leisure, Industrial Economics, Trade and Multilateral Issues, Social Analysis

Suggested Citation

Lakatos, Csilla and Maliszewska, Maryla and Osorio-Rodarte, Israel and Go, Delfin S., China's Slowdown and Rebalancing: Potential Growth and Poverty Impacts on Sub-Saharan Africa (May 10, 2016). World Bank Policy Research Working Paper No. 7666. Available at SSRN: https://ssrn.com/abstract=2779362

Csilla Lakatos (Contact Author)

Purdue University - Department of Agricultural Economics

403 West State Street
West Lafayette, IN 47907-2056
United States

Maryla Maliszewska

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Israel Osorio-Rodarte

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Delfin S. Go

Development Prospects Group, The World Bank ( email )

1818 H Street
Washington, DC 20433
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
82
Abstract Views
367
rank
324,499
PlumX Metrics