Chinese GDP Growth Slows Again, British BoE Policymaker Tucker Issues Dire Warning

Published: Thursday, 18 October 2012 09:00 BST - Written by Minesh Chaudhari

STORY LINK Chinese GDP Growth Slows Again, British BoE Policymaker Tucker Issues Dire Warning

They used to say that America sneezed and the rest of the world caught a cold. Last night’s Chinese Q3 GDP growth data, which showed that economic activity in the world’s second largest economy slipped from an annualised 7.6% during Q2 to 7.4% in the three months to the end of September, suggests that it’s now a case of the world catching a cold when the eurozone sneezes. Commentators have blamed the continued slowdown in China’s economy on decreased demand from the nation’s key export markets, and in particular the EU; recent trade figures have shown that the region is sucking in less imports than in previous years as self-imposed austerity measures in several states begin to bite.

Elsewhere, Bank of England Deputy Governor and MPC member, Paul Tucker, made some interesting comments when he addressed the British Bankers Association’s annual conference in London yesterday. Tucker, who is considered a leader contender for the ‘top job’ at the Bank when current incumbent Mervyn King steps aside, proposed that retail and investment bank chiefs should be paid in the debt of their own institutions so that they have a genuine interest in their bank surviving and prospering. The comments hint that Tucker feels that more British banks may fail before the slow-rolling ongoing global credit crisis is fully played out. He confirmed that this was his line of thinking by going on to state that the ‘worst may be ahead’ for the global and British banking sectors. If this prophesy is fulfilled, then 2013 could be the most interesting year yet for the world’s currency market.

Elsewhere, Japan's Prime Minister Yoshihiko Noda has announced that his government will be introducing new stimulus measures in order to kick-start his nation’s stagnant economy. The news saw Asian stock markets perform strongly during the overnight session. If this pattern is continued during the European and North American sessions, then the safe-haven US Dollar could lose further ground later today, sending the GBP USD exchange rate back towards its 13-month high in the 1.63s once more.

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