US Slowdown May Hit LatAm Via China

A US slowdown could contribute to a decline of up to 2% in China’s economy for the coming year, albeit to a still high 9%, according to William Rhodes, senior vice-chairman at Citigroup. That in turn may have an effect on LatAm, as the region relies heavily on strong Chinese demand for commodities. The executive, who believes decoupling is a myth, notes the direct impact of the US slowdown on LatAm has been muted, but that reverberations in other markets may still find their way to the region. “If you break down the GDP figures for Latin America, you will see the importance of China to the region,” said Rhodes, speaking at LatinFinance’s 20th Anniversary Gala Dinner in Miami. “The Chinese are now concerned that in addition to the steps they’ve taken to cool down their economies, that if the economy in the US goes into a deep dive that this could impact them more than they thought earlier,” says the executive, echoing a frequently noted concern among economists at the IDB meetings. In the long run, however, Rhodes has a positive outlook on China, and points to changes in the government’s approach to sustainable development that will provide an important source of stability for LatAm.