High Debt and Interest Rates. China’s Q1 GDP Growth

Erik Norland, Senior Economist, CME Group

Budget Deficits and Public Debt

• Middle-income nations cut rates to complement fiscal spending.
• Rich nations where rates were low relied on government spending.
• Further fiscal spending to mitigate pandemic depends on interest rates.
• Course of budget deficit, debt levels depend on interest rates.

China’s Growth Bouncing Back?

• ​​​​​China’s economy grew 18.3% in Q1, up from 6.8% slump a year ago.
• China has shown 5% compounded growth rates since Q1 2019.
• Manufacturing sector outperformed amid strong US demand.
• China’s domestic air travel has not fully recovered from pandemic.