Global growth looks to be smoothly downshifting as China slows, the US economy firms, and troubled Europe, at least for now, avoids a messy crash.
China will take measure to stabilize its exports and imports as slowing global growth creates a “grim situation” for trade, said Zhang Xiaoqiang, a vice chairman at the nation’s top economic planning agency.
Ratings downgrades on nine euro zone countries by Standard & Poor’s late Friday – including France, Italy and Spain – sent a shiver through financial markets.
A global economy slowing only gently would be an immense relief after a fraught end to 2011, but it is far from guaranteed.
Greek debt talks could collapse next week in a tussle over the size of losses banks should face.
And US data last week showed surprisingly weak retail sales and a rise in jobless claims, a reminder that the US recovery is not yet out of the woods.
So, even as signs suggest only a slight easing in global growth this year to a pace around 3 percent, the pitfalls are numerous.
China’s export growth saw a fourth consecutive monthly decrease, to 13.8 percent in November 2011.
It would be the slowest pace of growth since mid-2009 when the global economy was crawling out of a deep recession.
Without China’s growth of consumption economy, the global economic recovery will be a prolonged and painful process.
However, exports are not putting a dent into Ireland’s unemployment rate, which keeps consumer demand low and in turn hinders economic growth.
That’s why we think Asian country probably is not going to be very keen to allow the currency appreciation,” said Pu.In the United States, the push is on to boost exports. On Thursday, the largest business federation in the US called on Congress to expand free trade agreements in emerging markets from Brazil to Indonesia.”.
US trade data for November was mildly encouraging on that score, with exports to China up by 2.1 percent to their highest level in almost a year.
In International Trade, “exports” refers to selling goods and services produced in home country to other markets.
China Burma India Theater was the name used by the United States Army for its forces operating in conjunction with British and Chinese Allied air and land forces in China, Burma, and India during World War II.
China’s inflation rate also eased, and foreign exchange reserves declined in November and December, the first consecutive monthly fall since early 2009, another clear sign that China’s days of export-led growth are waning and capital is leaving the country.
Asha Bangalore, an economist at Northern Trust in Chicago, zeroed in on another key trading relationship: China and Germany.
Chinese imports from Germany increased by 4.2 percent in December, marking the slowest growth rate since October 2009.
.”The broader implication of these trends is that not only is German business activity hit by a deceleration of imports of China but the intricate web of world trade has a wide reach and will translate into a setback in business conditions among other trading partners,” Bangalore wrote to clients last week.
Germany’s economy contracted by about 0.25 percent quarter-on-quarter over the last three months of 2011, deepening worries that the entire euro zone is slipping into a recession.
EMERGING MARKETS SLOWA sharp slowdown in Chinese demand would also spell trouble for commodity exporters such as Australia and Brazil, whose fortunes are increasingly tied to China’s.
Chinese export’s growth slowed in December, reflecting the slowdown in global demand and pointing to Europe’s debt-crisis negative impact on global economies.
BEIJING (AP) — China’s central bank is promising pro-growth conditions this year to support struggling entrepreneurs but says it will stay prudent amid complex global conditions and inflation pressures.
Figures from other Asian countries offer a few more clues on how China’s domestic economy is holding up.
Exports to China are a tricky indicator because it is never entirely clear how much is destined for domestic consumption and how much represents partially finished goods ultimately heading to the United States or Europe.
The impact of SP’s downgrade on these nine countries is “limited” in terms of China’s financial outlook, but the deepening crisis in Europe, China’s largest trade partner, could further weaken the country’s exports and therefore hinder its economic growth, Yuan said.
But the pattern is clear: the flow of goods into China is slowing, including from other Asian countries.
Taiwan’s export growth in December was the weakest in more than two years, and exports to China fell 2.9 percent from a year earlier, a second straight month of negative readings.
Malaysia has also reported significant slowdowns in exports to China, and South Korea has warned that its export prospects look gloomier in 2012, in part because of weakening demand from China, its top export destination.
In the Chinese data, an index of export orders indicated a third month of contraction, while South Korea forecast that its own overseas shipments will grow in 2012 at only about a third of last year’s pace.
A gradual, modest downshift in China’s growth would be a welcome development for Beijing, which spent the better part of the past two years trying to cool the economy to get inflation back under control.
For the fifth straight month China’s inflation cooled in December, which is increasing the probabilities that the government will reveal more measures to support the nation’s growth.
Instead, the next move is likely to be a cut in the amount of reserves that banks are required to hold — a step that could come as early as this week to meet demand for cash ahead of the Chinese New Year on January 23.
Regardless of all the hype of tight monetary policy, in 2010, Chinese banks issued 7.95 trillion yuan of loans, breaching the government’s target ceiling of 7.5 trillion yuan.
For example, economists suspect that a surprisingly strong reading on manufacturing in December may have been tied to New Year’s demand and will be reversed in the coming months.
Figures for January may look abnormally weak because factories typically close as hundreds of millions of people travel home to visit family.
The New Year holiday falls unusually early this year; in 2011, it was on February 3.
.”All the celebration and travel is putting a little kink in the economic data – not just on the mainland, but regionally,” said Frederic Neumann, co-head of Asian economics at HSBC in Hong Kong.
The economic data for the Asian region continued to provide unclear rhythm about the outlook for Asian economies, while the impact of European debt crisis on the financial markets remains the only fact nowadays.
Meghan Johns is a business journalist based in San Francisco, California. Meghan has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Meghan spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.