China has been warned that meltdown in the eurozone poses a ‘key risk’ to its economy as the crisis in the single currency reverberates around the world.
Alarm bells also rang in Japan, the United States and Germany as the world’s four biggest economies felt the impact of the financial storm battering Europe.
The warning came as borrowing costs in Spain – widely seen as on the brink of needing a full-blown international bailout – soared to a new euro-era high of 7.7 per cent before easing back slightly.
French President Francois Hollande urged fellow eurozone leaders to press ahead with the reforms set out last month to shore up the European banking system and prop up Spain.
The International Monetary Fund said demand for Chinese exports would be hit as the eurozone tumbles deeper into crisis.
The eurozone is a key market for Chinese exports. Growth in China, the world’s second biggest economy, has already slowed to a three-year low, expanding at an annual rate of 7.6 per cent in the second quarter.
Exports from Japan, the number three economy in the world, fell by 2.3 per cent in June for the first time in a year.
In the US, the world’s largest economy, sales of new homes saw their biggest drop in more than a year in June and prices slid.
And in Germany – the world number four and European number one – business confidence crashed to its lowest level since March 2010. A spokesman for the Economy Ministry warned that ‘uncertainty in the eurozone has increased’.
Jim O’Neill, of Goldman Sachs Asset Management and a candidate to be the next Governor of the Bank of England, said at least one member of the eurozone will leave by 2014 unless swift action is taken...
Source: Argentine Beef Packers S.A.
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