CHINAâ€™S economy is losing momentum but itâ€™s not bad news for dairy exports.
Rabobank head of financial markets research Asia Pacific, Adrian Foster, expects Chinaâ€™s economy to grow 8% over the next two years after peaking at 12% in 2010. He says 11.7 million people are still moving annually to cities in China, opening new markets for dairy products.
â€œJust keep in mind 650 million Chinese people are yet to move,â€ he told the Dairy Business Conference in New Zealand last month. He spoke on â€˜State of Play- a global perspective.â€™
Foster says the Chinese economy faces two big problems: over-supply of property and indebted local government.
â€œBut we should keep these risks in perspective and think about the outlook,â€ he says. â€œMy view is the combination of the global backdrop, the cyclical risks confronting Chinaâ€™s economy and the underlying factors supporting their trend growth momentum will resolve themselves with growth of circa 8% year-on-year in their economy this year and next.â€
He also brushed aside concerns on the US and EU economies. â€œThe headlines are overstating the negatives.â€
Since Greeceâ€™s bailout, attention is turning to Italy, the EUâ€™s third largest economy. But Foster believes thereâ€™s nothing to worry about.
â€œRecently the European Central Bank has provided effectively unlimited liquidity to the eurozoneâ€™s financial system and this has seen risks subside noticeably, and will over time support growth in the broader economy. I donâ€™t think a financial crisis is brewing in the EU.â€
On the US economy, Foster sees signs the economy is picking up. But until the labour market shows marked improvement, interest rates are likely to remain low for two years.