The worsening impact of Europe's debt crisis on global growth was laid bare yesterday as a fresh slowdown put China on course for its worst year for more than a decade.
The world's second biggest economy saw annual growth slow to 7.6 per cent between April and June, the weakest in three years.
Other key Asian trading nations – South Korea and Singapore – saw a slowdown or outright contraction as the woes of the debt-laden West weighed on exports.
The dire news comes as the International Monetary Fund prepares to slash its latest global growth estimates on Monday.
Christine Lagarde, the head of the IMF, has warned that forecasts will "certainly" be lower than the 3.5 per cent pencilled in in April.
China has cut interest rates twice since the beginning of June, while South Korea's central bank also loosened policy yesterday in an attempt to shore up growth.
But Michael Hewson, at CMC Markets, said: "What the past seven days are showing us is that economies across Asia are slowing and central bankers are running out of bullets."
Beijing insists it is on track to hit its annual growth target of 7.5 per cent, but yesterday's data signals an eighth quarter in a row of slowing growth.
A Chinese government spokesman said: "We have seen tepid domestic and external demand." Its manufacturers are now growing at an annual pace of 7.5 per cent, down from 9.1 per cent at the beginning of the year.
Meanwhile South Korea's central bank cut growth and inflation forecasts for both 2012 and 2013 less than 24 hours after delivering a surprise interest rate cut. The Bank of Korea – blaming the eurozone crisis for the move – expects Asia's fourth-largest economy to grow 3 per cent this year, down from 3.5 per cent in April.
Singapore's economy shrank 1.1 per cent between April and June, reversing a strong performance in the first quarter of the year.Reuse content