The world may see an economic recovery in 2021 but one is underway already in China, the world's leading mining and metals company by market capitalization says.
Many economists say the international economy will see a contraction for 2020 on account of the worldwide effects of the COVID-19 pandemic. One bright spot in this gloomy forecast, however, is China where a "pretty solid V-shaped recovery" is underway BHP Group chief executive Mike Henry says.
China's government "has stepped in with some stimulus that we expect is going to create further momentum through to next calendar year. So things are looking pretty positive and pretty resilient," Henry said.
The rest of the world won't enjoy China's good fortune, however. Henry said his company expected a contraction in the international economy during this calendar year but a welcomed and strong recovery in 2021.
"We then expect there to be a pretty sharp uptick again next year - so we foresee it taking about a year for the world to get back to the levels of economic activity that existed pre-COVID and maybe two or three years for the world to get back fully on the track that it would have been on if not for COVID-19," he said.
China's economists agree with Henry. Earlier in August they said China's V-shaped recovery had only just begun. They quoted second-quarter gross domestic product, which grew 3.2 percent year on year - reversing a 6.8 percent contraction from the first quarter. Positive signs are seen in rising employment, strong industrial chains and a resurrecting services sector.
The manufacturing purchasing managers' index rose to 51.1 in July from 50.9 in June for a fifth consecutive month of improvement and confirmed stronger confidence among businesses for an economic recovery.
China's economists said its economy was well on its way toward a "V-shaped recovery" which would return it to prepandemic levels. They predict the rebound will boost the pace of recovery in other countries.
China's gross domestic product bounce back is expected to consolidate in the third quarter with 2.5 percent growth and then 3 percent growth in the last three months of the year thanks to more government measures and incentives.
"China's economy has gradually emerged from the slump and returned to the level it was roughly at before the outbreak, backed by the stimulation that has delivered burgeoning signs of work resumption, industrial chains and services sector," Orient Securities Co. Ltd. chief economist Shao Yu said.
