World Bank Warns Of Slowdown In China

On Wednesday September 26, 2012 I wrote about how China’s market woes were continuing to be a thorn in the side to investors looking overseas for some kind of direction regarding what has been the world’s largest expanding economy. Before that on the 24th I commented on news that Chinese regulators were discussing possible stimulus measures to keep that market from collapsing.

In follow-up to those two posts, I wanted to ensure that readers are aware that yesterday, the World Bank warned that China’s economy faced a slowdown. That news perhaps contributed to the drop we saw yesterday in the precious metals space, namely silver and the other industrial metals. You see, as China’s economy goes, so does their need or demand for industrial metals. As reported by The Guardian,

The World Bank cut its economic growth forecasts for the east Asia and Pacific region on Monday and said there was a risk the slowdown in China could worsen and last longer than many analysts have forecast.

"Unlike the rest of the region, China is experiencing a double whammy – the growth slowdown is driven by weaker exports as well as domestic demand, in particular investment growth," World Bank chief economist for the region, Bert Hofman, said at a briefing in Singapore.

Keep in mind that China isn’t going to fall off a cliff. They are still expected to grow by a revised 7.7% vs. the prior estimate of 8.1% However, we still need to stress that despite the fact their growth is still expected to be positive, the World Bank’s numbers still indicate that this represents the slowest growth rate in the Asia Pacific region since 2001 and even lower than at the peak of the financial crisis in 2009.

As investors, it is crucial that this data be factored into your decisions. A dramatic slowdown in China can have rippling consequences across all markets already burdened by the fiscal crisis in Europe and the United States’ seemingly inability go get any traction with their own growth.