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Monday, March 17, 2014

If there were any doubts that the Chinese economy is slowing down, data released with respect to industrial and retail activity would help dispel it further. As reported in various business dailies, industrial output rose 8.6% YoY in the January-February period. This is down from a 9.7% increase in December and is the slowest since 2009. Growth in fixed-asset investment also reduced to 17.9% YoY, the weakest pace since 2002, down from 19.6% last year as a whole. Indeed, it is likely that GDP growth for the first quarter of 2014 could be lower than the 7.7% rate logged in during the same period in 2013. Overall, China has pegged a 7.5% growth in GDP for 2014. Given that China is one of the largest consumers of raw materials in the world, the slowdown there has had a telling effect on commodity prices as well. For instance, both copper and iron ore have seen a significant correction in prices. Since growth continues to stagnate in the developed world and the emerging markets most notably China are slowing down, the overall GDP growth rate for the world economy is most likely to be tepid this year. 

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