Citigroup Sees 55% Risk of a Global Recession Made in China

In an analysis published late on Tuesday, the New York- based bank’s chief economist, Willem Buiter, said there is a 55 percent chance of some form of global recession in the next couple of years, most likely one of moderate depth and length. Unlike the U.S.-driven international slumps of the past two decades, this one will be generated by sliding demand from emerging markets, especially China, which has surged in size to become the world’s No. 2 economy. “The world appears to be at material and rising risk of entering a recession, led by EMs and in particular by China,” wrote Buiter, a former U.K. policy maker.

Among reasons for worry is his view that in reality China is already growing closer to 4 percent than the government’s goal of about 7 percent targeted for this year. A shallow recession would likely occur if expansion slowed to 2.5 percent in the middle of next year and stayed there, he said.