United States and China
With the end of the pandemic, the Chinese and American economies are facing challenges. In the United States, the huge monetary and fiscal stimuli that boosted the economy have generated the highest inflation in the past 40 years, prompting the Federal Reserve to drastically tighten monetary policy. However, so far all the indicators point to a high level of activity and investments alongside a still heated labor market.
The Fed is fighting to offset the effects of the fiscal incentives of the Biden administration. In China, the economic activity has the opposite behavior, especially regarding the real estate market, which represents nearly 30% of GDP and has been an important source of growth since the turn of the century. Besides cyclical problems, China is facing structural questions, such as the geopolitical competition with the United States and the end of the demographic bonus, together with internal unease produced by the strict rules on social isolation imposed during the pandemic.
The government is having problems in stimulating the economy, which is experiencing deflation. With the apparent exhaustion of the Chinese growth model and the tight monetary policy in the United States, these two economies should make an important contribution to slower global growth in 2024, with important effects on the Brazilian economy.
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