Focus On 26 February 2016

Focus On - The Chinese Slowdown: Every Cloud Has a Silver Lining

The slowdown in China (GDP at +6.9% in 2015) should be viewed as an evolution of its economic structure, more oriented in the future toward internal consumption and less on export and investments.

Executive Summary

The slowdown in China (GDP at +6.9% in 2015) should be viewed as an evolution of its economic structure, more oriented in the future toward internal consumption and less on export and investments.

 

This adjustment has impacted the global economy and particularly a few countries of Latin America that have suffered a decline in their commodity exports (especially metal ores).

 

The effects have not been the same for all: this Chinese realignment may be advantageous, however, for those sectors where demand from the Chinese market is expected to increase, especially agro-food products.

 

The beneficiaries include not only a few Latin American countries but also Italy. Italian companies may seize on two opportunities:

 

(i) exploiting changes in the eating habits of the Chinese population by exporting high-quality processed foods to the country;

(ii) supplying machinery for the processing of agricultural raw materials to the Latin American countries to increase the output of those farms goods (raw materials and intermediates) that might be absorbed by the Chinese market.

 

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