Harvard Professor Predicts a China Crisis Will Spark a Regional Slump

Kenneth Rogoff, the Harvard University Professor and economist, who in 2008 predicted the fall of big American financial institutions, says China’s economic growth will dive to as low as 2% following the collapse of a “debt-fueled bubble” within 10 years. This will then trigger a regional recession, reports Bloomberg.

 

Bloomberg says that while Rogoff isn’t sure what will cause China’s bubble to pop, land is his "best bet", as real estate values in Shanghai and Beijing have “taken a departure from reality."

 

Rogoff told Bloomberg that a collapse would decrease output gains to 2% to 3%, a “very painful” period which would last for more than a year. “We would learn just how important China is when that happens. It would cause a recession everywhere surrounding,” he told Bloomberg.

 

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