Evaluate the Consequences for the Global Economy of the Chinese Economic Slowdown

Evaluate the consequences for the global economy of the Chinese economic slowdown (20)

An economic slowdown occurs when the rate of economic growth slows in an economy. Countries usually measure economic growth in terms of gross domestic product (GDP), which is the total value of goods and services produced in an economy during a specific period of time. The rate of economic growth or decline is calculated by determining the percentage change in GDP from one period to another. For example, the value of a country's GDP in the second quarter of this year may have increased 2% from the value from the first quarter GDP. On the other hand, if GDP rose only 1.5% between the second quarter and the third quarter, we can say that the economy is slowing down because it is not growing as fast. The effects of a slowdown in China are felt all over the world; China's near neighbours are tied in to its manufacturing processes. Other countries supply it with oil and gas, while some far-away places in Africa and South America provide it with metals and other primary materials. Agricultural produce is important to Brazil and New Zealand. Lastly, several European countries are surprisingly tied in, often for luxury goods.

One consequence on the global economy would be on global commodity markets. Over recent years, China has become the world's largest importer of a cluster of commodities such as iron ore, coal and copper. The consequences among global economies is that commodity prices will be lower because of the Chinese slowdown - we are already seeing some of this effect in the steep decline in world oil prices. Most of the region's exports to China are energy-based, including uranium from Jordan. It is possible Saudi Arabia and Qatar will find other buyers for their oil and gas, but the China effect is driving down all commodity prices, so even if there is a buyer it will be at a huge discount compared to last year. Taxes on commodity exports are expected to plunge, hitting...