(Bloomberg) -- Bridgewater Associates’ Greg Jensen said a successful China reopening after three years of sporadic pandemic lockdowns will pose a risk to economic growth in the US and Europe by increasing the inflation pressures that are driving central banks to raise interest rates. 

The Bridgewater co-chief investment officer said the shutdowns in China have been a “blessing” for the rest of the world by slowing the second-largest economy.

“It’s been such a disinflationary force into a global inflation,” he said on Bloomberg TV Thursday. “China opening and the effect that’s going to have on commodity prices, in competing for raw materials in the world, while the US and Europe are entering recession, will probably make the central banking dilemma worse.”

The impact of the Asian superpower’s bid to move away from its restrictive and long-held Covid Zero policy has been a matter of debate on Wall Street. Some, including Goldman Sachs Group Inc. President John Waldron, see China’s road to reopening as possibly “bumpy” for global growth, while others, including Morgan Stanley’s chief China economist Robin Xing, see the US and Europe as “poised to gain” from increased demand from China.

The nation’s stringent policies have been a drag on its economic growth by hitting consumer and business confidence, and they sparked protests by residents frustrated by cycles of virus outbreaks and lockdowns.  

“It’s worth noting that China did not do the type of balance sheet actions that US, European policy makers did in the sense that Chinese small and medium businesses are coming out of this with much worse balance sheets than they had,” Jensen added. “You come out with much bigger overhang in China.”

The executive — who served as CEO in the early 2010s and is now co-CIO with Bob Prince — also predicted that the next US downturn will last longer than previous recessions due to ongoing Fed policy tightening. 

“We’d expect kind of double the normal length of a recession because the Fed’s not going to be at your back for a long time,” he said. “The good news is the leverage in the financial system isn’t that bad. So you don’t have this cascading effect like in 2008. Instead you have this long grind that’s probably a couple of years and asset prices as a result start to price that in.”

While the latest consumer price index showed a cooling of inflation, the labor market has exhibited strength in the face of the Fed’s rate hikes and the S&P 500 has gained nearly 9% since early October.

“There’s a lot of talk about recession, but very little recession priced in,” Jensen said. “You’re going to see relatively large moves as you shift from a world that’s fully focused on the Fed to one that’s focused on the recession and dollar squeeze that we see coming into the next year.”

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