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EUROFER Q4 2012 economic & steel market outlook - Key emerging regions
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Tuesday, 20 Nov 2012
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China slowing further, but probability hard landing is small
Other BRICs losing steam as well
Some recovery foreseen for 2013

The latest data for China show that economic momentum cooled further in the 3rd quarter. Growth in exports, retail sales and industrial activity continued to slow. Household demand remained firm so far this year, but cannot compensate for the weakness in EU and US export demand. Falling inflation provided the government with some leeway to stimulate the economy by lowering interest rates; also additional public investment was announced. Further policy support will be provided if the slowdown takes longer than expected, thereby reducing the risk of a hard landing.

China’s investment and export oriented growth model reaching its limits will in due time create a more balanced growth foundation but will dampen growth in the short run. GDP growth is will probably not exceed 8% in 2013.

In India GDP growth remained under pressure in Q2. The weakness in domestic and export demand is reflected in soft industrial activity levels. High inflation limits the room to lower interest rates to stimulate the economy. Following 5% growth in 2012, GDP could rise 6% in 2013.

In Brazil economic momentum remained disappointing. The central bank lowered its policy rate to 7.5% in August 2012 to support growth. A new infrastructure program will help to address more structural constraints to growth. GDP will increase only 1.5% this year, followed by 4% in 2013.

In Russia, GDP growth remained rather firm in H1 2012. Expectations for H2 are more muted, due to a rise in inflation, weaker domestic demand and sluggish demand from abroad. GDP growth is seen at just below 4% in 2012 and 2013.

Source - EUROFER

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