Speaking at the Asia-Pacific Economic Co-operation Summit in Vladivostok, Russia, the head of the International Monetary Fund said the US tax increases and spending cuts that come into effect in the new year, were one of the largest risks to the global economy.
She also named the eurozone crisis and medium-term public financing, as the two other greatest risk factors.
Her comments came as jitters grew over China, the global engine of growth, as it said its factories ran last month at their slowest rate for three years. It is the latest sign of a deepening slowdown in the world’s second-largest economy.
Data published yesterday by China’s National Bureau of Statistics showed that industrial output increased 8.9pc in August from a year earlier. Compared with a 9.2pc gain in July, August’s rise undershot market forecasts for a 9.1pc rise and is the weakest since May 2009.
China’s factory sector has been hit by slowing new orders. Surveys of purchasing managers earlier this month showed heightened concerns about
new business, suggesting that manufacturers will run inventories down further before they can begin to turn production up again.
The data could spur speculation that China will further adjust policies soon to lift an economy mired in its softest period of growth in three years.
China’s economy expanded 7.6pc in the second quarter, the worst performance in three years and the sixth straight quarter of slower growth.
Urban fixed asset investments – a key measure of government spending on infrastructure – rose 20.2pc in the first eight months of 2012, compared with the same period the year before, the statistics bureau also said yesterday.
Retail sales, China’s main gauge of consumer spending, were 13.2pc higher in August year-on-year, slightly better than the 13.1pc increase recorded in July.
Chinese authorities have taken steps this year to boost growth by cutting interest rates twice in quick succession and slashing the amount of funds banks must keep in reserve to boost lending.
But a separate report yesterday showed that inflation accelerated, with consumer prices rising at a faster pace for the first time in five months, increasing to 2pc in August from July’s 30-month low of 1.8pc.
Those figures suggest that room to ease monetary policy to shore up growth may be narrowing. Dong Xian’an, economist with Peking First Advisory, said: “Inflation is coming back quickly. Together with rising home prices, it will limit the scope for further policy relaxation.”
President Hu Jintao reiterated on Saturday that China will work to balance “steady and robust growth, adjusting economic structure and managing inflation expectations.” He pledged to boost domestic demand and ensure “basic price stability”.
The Telegraph
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