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Lower Inflation In China Could Be Good For Its Economy
Inflation in China slipped from 2.5% in January to 1.5% in December. This could be partly attributed to a cooling off in its GDP growth rates.
The per capita GDP in China has grown by 129% in the last ten years. Still, it’s much lower than the per capita GDP of developed markets.
As the second-biggest economy in the world, China is important. It’s also growing at a much faster rate than the biggest economy, the US.
The Chinese GDP growth rate has been declining since 2011. Recently though, China posted its weakest annual growth rate in 24 years.
The IMF thinks the risk of “shifts in markets” is elevated. If the US moves toward normalization, capital outflows from emerging nations could result.
India’s growth is expected to be among the strongest of the BRIC nations—Brazil, Russia, India, and China. That’s good news for India-focused ETFs.
China has posted growth over 7% for several years. Olivier Blanchard, chief economist at the IMF, called the slowing growth in China “a good thing.”
Russia is the clear loser in the IMF’s global economic update, and this will strongly impact the Commonwealth of Independent States.
The central bank introduced new policies just eight days after the European Court of Justice backed further monetary easing for the Eurozone.
The US economy is expected to grow by 3.6% in 2015. That’s because the US is a consumption-driven economy.
The economic growth forecast for emerging market and developing economies is for slower growth in 2015. But, things should pick up again in 2016.
The International Monetary Fund expects the world’s economic growth to rise by 3.5% in 2015 and 3.7% in 2016, a pace it describes as “moderate.”
Global markets have reacted positively to the euro quantitative easing announcement.
The quantitative easing (or QE) bond buying program is to last from March 2015 until September 2016.
Over the last six months, the euro has been sliding against the US dollar. The currency has been losing value due to growing fear among investors.
Interestingly, about 25% (EUR 1.2 trillion) of the current Eurozone government bond market is trading with a negative yield.
The Economic Sentiment Indicator (or ESI) reflects general confidence in the economic activity of the European Union.
PPI and CPI have been treading downwards in the Eurozone since early 2011. The persistently low inflation levels have lowered output costs for producers.
With negative inflation for the first time in five years in December 2014, the ECB has moved further toward providing long-awaited stimulus.
Eurozone unemployment has held steady at a rate of ~11.5% of the working population since June 2014.