China Shock hitting euro-zone harder than most regions

China Shock 2.0 will be a structural drag on euro-zone growth for the rest of this decade. Consumers will benefit from cheaper and increasingly sophisticated Chinese imports but manufacturers are losing market share both at home and abroad. The net effect will be to reduce euro-zone GDP growth by 0.1-0.2ppts per year for the rest of the decade, though this effect will be concentrated in Germany.

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