Chinese slowdown could trigger global recession, warns top Northern Ireland economist
The risk to the world economy posed by slowing Chinese growth cannot be discounted, a Northern Ireland economist has said.
China's economic growth edged down to 6.8% in the final quarter of 2015 as trade and consumer spending weakened, dragging full-year growth to its lowest level in 25 years.
The slowdown has led the International Monetary Fund (IMF) to cut its growth forecasts for the next two years.
In its latest World Economic Outlook, the IMF predicted world growth of 3.4% this year, followed by 3.6% in 2017.
This is a cut in growth of 0.2% in each year from when the agency published its last forecasts during October.
Growth has fallen steadily over the past five years as China's Communist Party has tried to steer away from a worn-out model based on investment and trade toward self-sustaining growth driven by domestic consumption and services.
A number of Northern Ireland companies have targeted China for growth, with economic development agency Invest NI leading a trade mission there last year.
A spokeswoman for the agency said there were still opportunities for firms in China.
"Exporting is important to a company's continued success and to the growth of the Northern Ireland economy," they added. "But exporting also has its challenges, and unfortunately can be impacted by global conditions outside of anyone's control.
"Invest NI will always encourage companies to undertake full due diligence and analysis before entering any market, and while conditions in China currently appear challenging, there still remain opportunities for those businesses with the right products to meet China's consumer demands."
The spokeswoman also said there were plans for Invest NI to lead another trade mission to China this year.
Portadown bakery Irwin's has announced a deal to supply Irish biscuits to a Chinese supermarket, and meat firms Karro and Dunbia are to send pork products to the Asian country.
But David Dobbin, chief executive of Dale Farm, warned that falling demand in China has already hit its bottom line.
PwC chief economist Esmond Birnie said Northern Ireland exports to China had reached around £90m in 2013-14, the most recent figures available, with around £25m being sent to Hong Kong every year.
"Whilst the 6.5%-plus rate still looks very impressive, it is well below the trend and many commentators think the "true" rate of underlying expansion is much lower," he added. "This matters for the West, given that China has been such a driver for total global demand."
He said the value of exports to China meant that it was a "not insubstantial" market for Northern Ireland and added: "The real big issue is whether turbulence in China, allied to the financial impact of a very low oil price, could tip world trade and growth back into recession. That grim possibility is not an inevitability but cannot be discounted."
The IMF kept its forecasts for the UK economy unchanged at 2.2% this year and in 2017. Chancellor George Osborne said the UK faced a "dangerous cocktail of new threats", including recessions in Brazil and Russia and rising Middle East tensions.