Worries about the impact on other emerging economies of a slowdown in China have risen back to the top of the agenda over the past month. While we do not believe a hard landing is likely, we do expect growth in China to slow further this year and next as policymakers try to limit wasteful investment. The impact on other EMs will be determined by what – rather than how much – they export to China. Countries that export large amounts of industrial commodities to China look particularly vulnerable to a slowdown in investment spending. For these economies, which are mainly in Latin America and Africa, a period of weaker growth now looms. In contrast, Asian economies that supply consumer goods to China could actually benefit as growth shifts away from investment and towards greater household spending.
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