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China's slowdown and rebalancing: potential growth and poverty impacts on Sub-Saharan Africa

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  • Lakatos,Csilla
  • Maliszewska,Maryla
  • Osorio-Rodarte,Israel
  • Go,Delfin Sia

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.

Suggested Citation

  • Lakatos,Csilla & Maliszewska,Maryla & Osorio-Rodarte,Israel & Go,Delfin Sia, 2016. "China's slowdown and rebalancing: potential growth and poverty impacts on Sub-Saharan Africa," Policy Research Working Paper Series 7666, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7666
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    References listed on IDEAS

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    1. Nelson Villoria, 2009. "China's Growth and the Agricultural Exports of Sub-Saharan Southern Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 21(4), pages 531-550, September.
    2. Villoria, Nelson & Hertel, Thomas & Nin-Pratt, Alejandro, 2009. "China's growth and the agricultural exports of Southern Africa:," IFPRI discussion papers 891, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Mavhungu Abel Mafukata, 2016. "The consequences of China's impending economic crisis on global economy: a predictive scenario on Sub-Saharan Africa," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 5(6), pages 24-41, October.
    2. World Bank Group, 2016. "South Africa Economic Update, February 2016," World Bank Other Operational Studies 23762, The World Bank.
    3. Sanghi,Apurva & Johnson,Dylan Conte, 2016. "Deal or no deal : strictly business for China in Kenya ?," Policy Research Working Paper Series 7614, The World Bank.
    4. Haile, Fiseha, 2017. "Global shocks and their impact on the Tanzanian economy," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 11, pages 1-38.
    5. Bekkers, Eddy & Koopman, Robert & Lemos Rego, Carolina, 2019. "Structural change in the Chinese economy and changing trade relations with the world," CEPR Discussion Papers 13721, C.E.P.R. Discussion Papers.
    6. World Bank, "undated". "Europe and Central Asia Economic Update, April 2016," World Bank Other Operational Studies 24013, The World Bank.
    7. Michael J. Ferrantino & Maryla Maliszewska & Svitlana Taran, 2019. "Actual and Potential Trade Agreements in the Asia-Pacific," World Bank Other Operational Studies 33549, The World Bank.
    8. David Laborde Debucquet & Will Martin, 2018. "Implications of the global growth slowdown for rural poverty," Agricultural Economics, International Association of Agricultural Economists, vol. 49(3), pages 325-338, May.
    9. Apurva Sanghi & Andrew Burns & Calvin Djiofack & Dinar Prihardini & Jagath Dissanayake & Claire Hollweg, 2017. "A Rebalancing China and Resurging India," World Bank Publications, The World Bank, number 28422.
    10. Punam Chuhan-Pole & Cesar Calderon & Gerard Kambou & Sebastien Boreux & Mapi M. Buitano & Vijdan Korman & Megumi Kubota, "undated". "Africa's Pulse, October 2015," World Bank Other Operational Studies 22722, The World Bank.

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