OECD: China slump clouds global economic growth outlook

Chris Papadopoullos
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A sharp drop in Chinese demand is already having significant spillover effects (Source: Getty) (Source: Getty)

A slowdown in China poses a significant threat to the world economy – especially if financial market conditions continue to deteriorate this year – the Organisation for Economic Cooperation and Development (OECD) said this morning.

China’s economy is expected to grow 6.7 per cent this year and 6.5 per cent in 2016, representing a slowdown from recent years’ growth.

But the OECD said that if the amount spent by China’s consumers, businesses and government grew by two per cent less than expected next year, it could knock 0.4 per cent off global growth, roughly equivalent to around $300bn (£194bn) of goods and services.

A sharp drop in Chinese demand for foreign goods and services is already having significant spillover effects on countries with close trade links to China, especially those that export commodities such as Brazil.

However, China’s weaker growth is not expected to derail the global recovery unless accompanied by further substantial deterioration in global financial markets, the OECD said.

“Global growth prospects have weakened slightly and the outlook is clouded by important uncertainties,” said OECD chief economist Catherine Mann.

“Emerging economies have vulnerabilities that could be exposed by rising US interest rates and/or a sharper-than-expected slowdown in China, giving rise to financial and economic turbulence that could also exert a significant drag on advanced economies.”

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