A sharper slowdown in China could derail the global economic recovery

Chris Papadopoullos
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China’s slump is not expected to derail the global recovery (Source: Getty)
A slump in China poses a major threat to the global economy, especially if financial markets deteriorate further, the Organisation for Economic Coop­er­ation and Development (OECD) said yesterday.
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.
Some analysts think it is nearer to five per cent due to the unreliability of China’s GDP figures.
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.
China’s slump is not expected to derail the global recovery unless accompanied by further 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.

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