ThinkForex - Analytics

    ThinkForex

    461.75 4.25/10
    80% of positive reviews
    Real

    Weaker Chinese growth 'not a disaster'

    A Chinese economic downturn may not be as bad as many fear. 
     
     
     
    A reduction in Chinese economic growth is not something that should be feared.

     

     

    This is the sentiment of Moody's senior research analyst Rahul Ghosh, who commented at a London press conference today (8 October 2015) that the Asian nation will withstand slower growth and a more unstable outlook in the months ahead.

     

     

    He made his comments in the wake of Moody's decision to maintain China's outlook for economic growth in 2015 at 6.8%, with a further increase of 6.3% forecast for the following year.

     

     

    Mr Ghosh argued that Chinese corporate credit providers should easily be able to absorb between a 5% and 10% devaluation in forex trading for the Yuan due to a reduction in economic forecasts.

     

     

    At present, some Chinese businesses do rely heavily on foreign debt, but it is believed the slight downturn in outlook is not enough to cause serious concern.

     

     

    "In a further 10% devaluation scenario, there would be some impact on the credit metrics for property companies," he added.

     

     

    The Shanghai Composite Index (SECC) continues to perform admirably in the wake of several developments that might have been expected to limit growth in recent days, with the market delivering an impressive upturn of 3% in its latest full trading session.

     

     

    It is a rise that follows in the wake of new reports from both the Organisation for Economic Co-operation and Development and the International Monetary Fund that have highlighted the potential for a reduction in the rate of global economic recovery in the months ahead.

     

     

    With the news serving to drive down the value of the US dollar, it appears Chinese investors may have been the big winners in this affair; although with increased instability forecast around the world, it is not yet a certainty that the SECC will be able to hold on to these gains.


    To leave a comment you must or Join us


    By visiting our website and services, you agree to the conditions of use of cookies. Learn more
    I agree