Should such a tail risk of financial volatility emanating from Europe be realised, it would drag China’s growth lower. The channels of contagion would be felt mainly through trade, with knock-on effects to domestic demand. In the downside scenario outlined in the WEO Update—which would see global growth falling by 1¾ percentage points relative to the baseline—China’s growth would fall by around 4 percentage points (Box 1). The risks to China from Europe are, therefore, both large and tangible.
From 8.25% to 4.25% that is.
But fear not, says IMF, because China can spend.
This article originally appeared here: IMF: China’s growth could be slowed by 4 percentage point if eurozone blows up
Also sprach Analyst – World & China Economy, Global Finance, Real Estate
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