The rating agency Moody’s said this Thursday that the slowdown of the Chinese economy will have very negative consequences in the year 2016 worldwide, but more strongly affect for the emerging countries.
The pronounced weakening of the Chinese economy “is currently one of the greatest risks to the global economy” said the document of the World Macroeconomic Outlook 2016 – 2017.
The text is expected to the emerging G20 economies that will grow a 4.2% in the year 2016, compared with a 4.4% last year, after Moody’s revise downward the growth of Brazil, Mexico, Argentina and Turkey. In the Chinese case it states that the economy will grow lower than the last year (a 6.9% of increase in the Gross domestic product – GDP – in the year 2015 to a 6.3% this year). The rating agency also believes that the “advanced economies” that are part of the G20 group will also have a lower growth, an average of a 1.7%, compared to a 1.9% achieved last year. This slowdown in the Chinese growth, says Moody’s, may cause a chain effect on the global growth and the risk aversion.
The behavior of the Chinese economy
The investment, the industrial production and the retail sales in China grew slower than expected in this April, according to the data released this week, raising the doubts about the health of the recovery of the world’s second largest economy.
“It seems that all the engines suddenly lost momentum and growth prospects have also softened” said Zhou Hao, an economist at Commerzbank in Singapore, through a research note.
The growth of the production in the factories cooled to a 6 percent in this April, said the National Bureau of Statistics, less than the a 6.5 percent estimated by the analysts on an annual basis and following an increase of a 6.8 percent in the previous month.
The expansion of the fixed investment, meanwhile, slowed to a 10.5 percent in the January – April period, below the market forecasts of a 10.9 percent growth and also below the 10.7 percent in the first quarter.
The slowdown in the fixed investment of the private enterprises is somewhat skeptical about the prospects for economic recovery. The investment of the private enterprises rose a 5.2 percent year on year between the months of January and April, it went down from a 5.7 percent in the first quarter.
In their report, the Chinese statistics office said the total amount of the private investment is relatively large, if it is continued the slowdown it could dampen the growth and requires a high degree of attention”.
The April retail sales, including the private sector and the government, rose a 10.1 percent on an annual basis, less than it was expected. The analysts had the forecast in an increase of a 10.5 percent, the same percentage recorded in the month of March.
The March data had encouraged hopes that the Chinese economy was taking off after a wave of fiscal, monetary and administrative incentives for more than a year ago. But the April data continued to show the evidence of a persistent weakness.
In a report published in the recent days, the Societe Generale recognized that the Chinese banks are currently exposed to losses of 8 billion yuan (nearly 1.1 billion euros) and an almost inevitable public bailout in light of the amount of debt weighing on the balance of large state owned enterprises.
The greater figures putting the disaster, it may end of the year with the percentage of loans in default or failed will be around a staggering a 22%, which contrasts with the 1.75% that recognize the authorities of the capitalist dictatorship.
China’s situation has seriously impacted other major economies such as Japan. The Tokyo Stock Exchange closed lower due to the appreciation of the yen, the weakness of the Chinese economy and the possible rise in the United States of America interest rates.
The concerns of a possible recession in China and other emerging economies weighed on the investor sentiment and the strength of the yen against the dollar was decisive in the loss of the value of the shares of the export sector.
The investors also remain nervous amid the growing expectations that the United States of America Federal Reserve will raise the interest rates.
Meanwhile the Tokyo Stock Exchange closed its operations down a 155.84 points (a 0.94 percent), with its main indicator, the Nikkei 225, in 16 thousand 498.76 units.
In China, the main indicators ended lower. The Shanghai Composite Index lost a 21.98 points, a 0.77 percent, to close at two thousand 821.67 units.
Meanwhile, the Shenzhen Component Index fell a 96.46 points, a 0.97 percent, to settle at nine thousand 821.70 integers.