China’s slowdown may have less impact than expected….for now

by Laura Ehrenberg-Chesler on August 27, 2015

in currencies,Debt,Foreign Markets

Over the weekend there was a good article in the “Wall Street Journal” which helped put the slowdown in the Chinese economy in perspective.

“China’s slowdown, at first blush, is a major setback for the world. China accounts for 15% of world economic output and has contributed as much as half of the world’s growth in recent years. But that overstates its impact on other countries. China exports far more than it imports, so a slowdown in its growth has a limited impact on its trading partners. Exports to China amount to less than 1% of GDP for the U.S., U.K., France, Italy and Spain, 2.6% for Germany and 2.7% for Japan…”

Clearly, for countries that are exporting commodities such as Brazil and Russia, the slowdown in China has more dire consequences. The implications of the collapse in oil and other raw materials on these and other emerging economies is something we will be watching closely in the coming months. Devalued currencies and the resulting deflation which effects a countries debt, as well as potential social unrest, could cause the Chinese slowdown to have broader effects on the developed economies in the future.

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