ECB sees bigger indirect impact from Chinese slowdown

The direct impact of China's economic slowdown on euro zone growth via trade will be modest, but the impact from indirect channels may be more significant, the European Central Bank said on Wednesday. China's economic growth dipped below 7 percent in the third quarter, its slowest since the global financial crisis, and Beijing has rolled out a flurry of measures to avert a sharper slowdown.
"Available estimates suggest that the direct and indirect trade effects from a 1 percentage point slowdown in Chinese real GDP are relatively muted, and amount to a decline of around 0.1 to 0.15 percentage point in euro area activity after two to three years," the ECB said in an economic bulletin. But it also warned that China's slowdown will cut growth in emerging markets and heighten global uncertainty, which could then indirectly affect euro area household confidence, holding back consumption and investments decisions.