The world economy lost momentum last month, following China’s shrinking factory output and declining growth in the Eurozone.
The results of various business surveys conducted around the world shows that the economies of Asia and Europe along with US paint a blur picture. As a result, the central banks around the world, especially People’s Bank of China and European Central Bank, have further loosened their monetary policy.
Many economists believe that the growth in world economy has deteriorated, primarily due to declining Chinese economy. China’s manufacturing and services sectors are contracting more rapidly than predicted, and there are much deeper job cuts. The August stock market crash along with devaluation of Yuan caused a complete slowdown in decades in the world’s second largest economy. It became extremely difficult for the Chinese government to pull out the economy from this major setback.
Contraction in manufacturing and services sector along with volatile equity market will further slowdown the country’s GDP growth. According to economists at Australia and New Zealand, Banking Group (ASX:ANZ ) China’s third quarter GDP will decline to 6.4%.