2015-12-27

China Fallout Goes Everywhere in 2016

Caixin: It's Time to Worry German's Economy
On October 14, the German government lowered its GDP growth forecast for this year from 1.8 percent to 1.7 percent. Despite this, the economic minister, Sigmar Gabriel, expressed his expectation of higher economic growth next year.

A majority of financial market participants share Gabriel's trust in higher German growth next year, but the reality is that the headwinds for the country's economy are strengthening. This is critical for China because Germany is one of its top export destinations.
2016 is when the China slowdown goes global and the feedback loop really kicks in:
German exporters are feeling the pain from the slowdown in business investments in many emerging market countries, as commodity prices have tumbled.
China could see exports to Germany drop because Chinese purchases of commodities dropped, which caused demand for German imports in emerging markets to fall, which leads to a slowing German economy in 2016.

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