China Woes A Threat To World Growth, IMF Warns

The International Monetary Fund (IMF) has warned of risks to world economic growth, as a closely-watched report on UK activity points to a slowdown.

The latest Markit (NasdaqGS: MRKT - news) /CIPS Purchasing Managers' Index (PMI) survey suggested the service sector, which makes up more than 75% of UK output, grew at its weakest pace for more than two years in August.

It (Other OTC: ITGL - news) cited a weakening of new business and wider findings pointed to the strong pound continuing to hit export demand.

The data culminated in a forecast of GDP growth for the third quarter of 0.5% - down from 0.7% between March and June, Markit said.

Its report was released as the IMF outlined its latest assessment of global threats ahead of the G20 meeting of finance ministers and central bankers in Turkey.

The findings indicated the scale of the challenges still facing world growth at a time when the US central bank is considering its first rise in interest rates since the financial crisis.

The headline was the economic slowdown in China, which the IMF declared as having larger-than-expected repercussions in other countries.

China's troubles have sent the prices of raw materials such as oil into a freefall, pinching Brazil, Russia and other commodity exporters.

A devaluation of the yuan last month had a limited impact amid the stock market turmoil of recent weeks, which has been largely blamed on China's struggles and fears of a US Federal Reserve rate increase.

The IMF said emerging-market countries should let their currencies fall substantially to support exporters and economic growth.

It also called for wider reforms to make their economies more efficient.

The UK's economic recovery has been reliant on consumer spending - boosted this year by job growth and weaker prices.

Manufacturing has remained weak because of low demand in key markets including China and the eurozone, the country's biggest trading partner.

However, wider PMI readings, also released on Thursday, suggested that efforts to stoke economic recovery in the single currency area were continuing to bear fruit.

While inflation has remained low, activity hit a four-year high, according to Markit.

Separate figures also pointed to growing consumer confidence, with retail sales finding some momentum in July.