It used to be said that when the US sneezed, the world economy caught a cold. This is still true. But now the world economy also catches a cold when China sneezes. It has lost its last significant credit-fuelled engine of demand. The result is almost certain to be a further boost to the global “savings glut” or, as Lawrence Summers calls it, “secular stagnation” — the tendency for demand to be weak relative to potential supply. This has big implications for global economic risks.

In its latest World Economic Outlook , the International Monetary Fund strikes not so much a gloomy note as a cautious one. The world economy is forecast to grow by 3.1 per cent this year (at purchasing power parity) and 3.6 per cent in 2016. The high-income economies are forecast to grow by 2 per cent this year, with growth at 1.5 per cent even in the eurozone. Emerging economies are forecast to grow 4 per cent this year. This would be well below the 5 per cent in 2013 or 4.6 per cent in 2014. While China’s economy is forecast to grow by 6.8 per cent and India’s by 7.3, Latin America’s is forecast to shrink by 0.3 per cent and Brazil’s by 3 per cent.

The IMF also lists enough downside risks for any committed worrier: disruptive shifts in asset prices and turmoil in asset markets; yet lower growth of potential output, which would weaken investment and aggregate demand; a bigger than expected decline in China’s output; yet lower commodity prices; a strengthening of the dollar, which would further undermine balance sheets of borrowers in dollars, particularly those who borrowed to finance commodity production; geopolitical risks; and further weakening in aggregate demand.