Slower-than-expected growth and enduring bank-stability issues continue to weigh on China’s risk outlook, according to ECR analysts.
Economic growth unexpectedly slowed to 7.7% in Q1 2013, according to China’s National Bureau of Statistics, casting a dark shadow over the country’s growth trajectory.
Participating economists reported a deteriorating growth environment in China as far back as Q3-2010, when signs emerged of a potential slowdown inside the world’s growth engine.
China’s economic outlook indicator has declined steadily during the past three years, falling by 1.4 points since Q3-2010. China’s economic indicator score of 6.9 hit a five-year low in Q3-2012 and has since failed to recover in Q1 2013 (see graph below).
China’s economic outlook score decline suggests that ECR analysts had expected a growth slowdown of some magnitude into the first half of 2013. Even when growth picked up in Q4-2012, to 7.9% growth, China’s economic indicator remained unchanged.
This is reflected by deteriorating country risk scores for some of the region’s strongest economies: Hong Kong (-0.9), South Korea (-0.9), Malaysia (-1.2) and Singapore (-0.1), all of whom have substantial trade and financial linkages with the economic superpower.