China Slowdown: A Drag on Global Growth

by: David Templeton November 16, 2008 | about stocks: CAF / DBO / DIA / FXI / OIL / PGJ / QQQQ / SPY / USO    

David I. Templeton

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A large player in the global/emerging growth story has been China's economic growth. Just as China was instrumental in the growth of the emerging markets, the countries recent slowdown is impacting global economic growth as well.

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The China government may report economic data in a more favorable light than what is actually occurring in the country. Consequently, growth could be much slower than reported. On Monday, China did announce a $586 billion economic stimulus package. This is an indication of how slow the GDP growth is in China. A few recent posts touch on the real impact China's slowdown is having on factories and unemployment.
One index to watch that might provide a clue to a pickup in global growth is the Baltic Dry Index. As the below chart notes shipping prices have declined significantly over the last several months. This is an indication that demand has fallen for overseas shipping vessels that often transport important commodities like iron ore and coal. More information on the Baltic Dry Index can be found at the below link.


Baltic Dry Index chart NovDisclosure: None

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This article has 5 comments:

  •  
    Nov 16 07:42 AM
    Excellent overview of China's slowdown and the weak Baltic Index. Both charts show economic trouble ahead, a time to be cautious.
    Reply | Link to Comment
  •  
    Nov 16 09:56 AM
    Quite intersting data work from the ground situation. Readers like me would like sector-wise slow down data-the Primary, the Secondary and the Tertiary sector data. We could exchange informations as well as conceptual constructs.
    Reply | Link to Comment
  •  
    Nov 16 09:22 PM
    Considering US, EU, Japan and a bunch of other countries already are in recession NOW, I think the following title would be closer to the truth:

    "Global Slowdown: A Drag on China Growth"
    Reply | Link to Comment
  •  
    Nov 16 11:43 PM
    Without recent stimulation package, China can still grow at 7% yoy. With added stimuli, it will add 1.5% to the growth to 8.5% GDP growth.
    Reply | Link to Comment
  •  
    Nov 17 08:50 AM
    Totally agree!


    On Nov 16 09:22 PM HaavBline wrote:

    > Considering US, EU, Japan and a bunch of other countries already
    > are in recession NOW, I think the following title would be closer
    > to the truth:
    >
    > "Global Slowdown: A Drag on China Growth"
    Reply | Link to Comment
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