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Scott Minerd
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As Chairman of Guggenheim Investments and Global Chief Investment Officer, Mr. Minerd guides the Firm’s investment strategies and leads its research on global macroeconomics. Prior to joining Guggenheim Partners, Mr. Minerd was a managing director at Morgan Stanley and Credit Suisse. He is... More
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  • China In Transition 0 comments
    Oct 11, 2012 12:12 PM

    The chances of a Chinese hard landing are increasing and I would not be surprised to see the growth rate in China fall below the projected annual target of 7.5%. There is a meaningful chance that the next quarterly GDP print could even be as low as 5%, which would be the slowest growth rate in over two decades.

    While a lot of people appear to be panicking over this, the fact is that this should be interpreted as a natural part of the evolution of China's economy. The law of large numbers dictates that it is harder to grow at as fast a rate off of a larger base. China's economy today is much bigger than it was even five years ago, so in terms of absolute dollar amounts China will remain a major contributor to global economic growth. Outside of strains for China's emerging market trading partners and commodity export oriented states like Australia, I do not think the slowing nominal GDP in China will have a significantly adverse impact on the global economy in the near-term.

    Additionally, there is a strong likelihood that more stimulus will come from the central government after the leadership transition takes place in November. While stimulus alone is not enough to fix China's problems, an announcement of lower interest rates or further investment could offset some of the downshifting we are seeing in the nominal GDP growth rate.

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