The Chinese economy is nowhere near growing at the rates government officials are claiming. That could result in a global stock market crash and even a recession for the U.S. economy. At least, that’s according to renowned financial commentator Marc Faber.
During an interview on Fox Business Network’s Risk & Reward, the publisher of The Gloom, Boom & Doom Report discussed the upcoming recession. (Source: Fox Business, August 14, 2015.)
Earlier this week, officials in China devaluated the yuan in order to boost the struggling economy. A cheaper yuan would help increase the country’s exports. Many economists anticipate that the Chinese economy is poised to grow at seven percent this year. However, data suggests that the economy is growing at a much slower rate.
“It’s nowhere near seven percent, and more likely close to two percent if any growth at all,” Faber told host Deirdre Bolton.
A slowdown in the world’s second-largest economy could drag the whole global economy into a dreadful recession. On the other hand, oil prices have declined to a six-year low, reflecting that the whole global economy may be on a verge of collapse.
“I think there is a deceleration of economic activity everywhere,” Faber said. He also remains certain that a recession in 2015 is imminent.
When Faber asked about the economic conditions at home, he said that the U.S. economy is growing but the rate of growth would not be sufficient to prevent a potential economic downturn.
“The U.S. has done relatively well, but also in the U.S. there are now cracks that are appearing—industrial production, new orders for durable goods. If you look at the trade balance of the U.S., imports are up and exports are basically down.”
While the Federal Reserve is expected to raise the federal funds rate this year, Faber thinks that officials will have to continue the money printing program to help the fragile economy keep going.