China's hot economy is coming off the boil. The third-quarter annual GDP growth figure is the lowest since 2003. Export orders have fallen and Stephen Green of Standard Chartered thinks export growth could slide to zero or even turn negative next year. But the slowdown isn't just about China's failure to decouple from the world economy. The housing market has turned, which has caused steel prices to fall as construction dwindles. September's industrial production growth was the lowest in six years, while consumers have become more cautious, too; car and clothing sales are all down.
China has been the main driver of growth in demand for commodities over the past few years. Throw in the downturn in the West and global growth could reach just 1.8% next year, the worst slump since the early 1980s, reckons Deutsche Bank. So "risks are still pointed to the downside for commodities", which measured by the CRB index are at a four-year low, said Morgan Stanley's Richard Berner. Goldman Sachs thinks supply may now outstrip demand in the metals complex and has slashed its forecast for the average copper price next year to $3,800 a tonne (it is now at around $4,200).
What next for oil?
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