Yet the most recent data on industrial production and factory orders, which dropped sharply in Germany, have confirmed widespread expectations of a modest slowdown.
Freeing up the financial system would give consumers more spending power and improve the allocation of capital.Even today's modest slowdown is causing unrest (see article).
But the manufacturing data on Wednesday, which gave the first insight into how the economy performed in August, showed that the modest slowdown of the past few months had not become a worrying decline.
Though the economy continues to grow at rates not far short of 10% a year, even a modest slowdown could result in the steel surplus having an impact on world markets.The world's big steelmakers are hoping that, by getting bigger, they can reap the rewards in the good times and insulate themselves if things turn nasty.
Economists expect the global purchasing managers indexes to show a modest slowdown in the pace of factory growth, although the readings probably pre-dated Fitch's latest downgrade of Spain.
GDP probably grew by 3.6% last year and forecasts for this year suggest only a modest slowdown.One clear sign of something amiss is Spain's current-account deficit, which widened to 8.8% of GDP last year, estimates the OECD.
Now, projections for demand are lower than expected because of the combination of rising oil prices, the European financial crisis and a modest slowdown in growth in China.
"A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization.
A modest slowdown in the West might even take the pressure off prices in Asia, without doing undue harm to the region's growth a case perhaps of the tiger eating the crocodile.
Instead it forecasts only a modest slowdown in growth.If this conclusion is right, much has changed, for the fortunes of the housing market and the economy have long been intertwined.
