Saturday, April 16, 2011

China sovereign wealth fund head sees global slowdown in 2012

BOAO(China): The global economy may slow down or even fall into recession again in 2012, Lou Jiwei , the head of China's $300 bn sovereign wealth fund, said on Saturday.

"We are relatively optimistic about 2011, but for 2012, it is possible there will be a big drop in economic growth or even recession," Lou, chairman of China Investment Corp , told the Boao Forum for Asia on the southern Chinese island of Hainan.

Lou said major economies may change their current pro-growth policies in the fourth quarter of this year, hurting economic performance.

In addition, oil supplies will likely be interrupted by the unrest in North Africa and the Middle East, he added.

Lou said the economic situation in the United States would remain largely unchanged, while European countries would be dragged down by weak domestic demand.

He also expected emerging markets to raise interest rates and allow their currencies to strengthen, causing a slowdown in economic growth in those countries.

CIC was set up in 2007 to invest a slice of China's massive foreign exchange reserves, which have ballooned to $3.05 trillion, in higher-returning assets.

It earned 12 percent on its global investments in 2009, reversing a loss of 2 percent in 2008. 

Source : ET

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