Annual Australian economic growth slowed to just two per cent as of June, which is well below its long-term average of 3.25 per cent.
In this context, the Chinese National Bureau for Statistics informed profits earned by Chinese industrial companies declined by 8.8 percent in August on a year-on-year basis, which was the sharpest fall in four years.
German Chancellor Merkel and International Monetary Fund head Lagarde.
Developed economies’ growth momentum continues, but is not strong enough to offset the slowdown we see in the emerging economies.
Releasing the report in Washington on Monday, she said these countries must tackle structural reforms such as removing infrastructure bottlenecks, improving the business climate and enhancing the quality of education.
While South Africa has a relatively well-developed manufacturing sector, a meaningful percentage of South Africa’s economy revolves around commodities.
“Global commodity prices have declined sharply over the past three years, and output growth has slowed considerably among commodity-exporting emerging market and developing economies”.
Some domestic spending to support growth could help, but that impact on broader economic growth will be limited. I think that the next global recession, if it occurs, will originate in China.
The measure is the truest gauge of Australians’ standard of living, adjusting for export and import prices, changes in population growth and and net income flows not accruing to residents.
Lead author, the IMF’s research department deputy division chief Oya Celasun, noted in the report that the slowdown was not just a cyclical event, but was structural as well because resources investment had fallen and was likely to fall further due to lower commodity prices.
Commodity prices reached record highs in 2011, but prices have fallen dramatically since then, especially the prices of iron ore and oil.
“Policymakers in commodity exporting countries therefore need to be careful not to overestimate the extent of excess capacity in their economies”.