China and other economies that have currently invested too much relative to their returns may be poised for an economic correction should the investment cycle experience a downturn, according to a report released by Standard & Poor's Ratings Services Thursday.
The report, titled "The Investment Overhang," examines the level of investments in major economies. Among a sample of 32 economies, including the 20 largest in the world, the report compares each country's investment-to-GDP ratio against real GDP growth.
"What we found is that China has the highest risk of an economic correction because of low investment productivity over recent years," said Standard & Poor's credit analyst Terry Chan. "Commodity-exporting countries like Australia, Brazil, Canada, India, Indonesia, and South Africa, along with France and Vietnam, have an intermediate downside risk."
Feedback
RSS
