CHINA’s output grew at a reported 11 per cent annual rate in the second quarter and India’s expanded by 8.4 per cent in the past financial year. These are markets that every Western equipment exporter is targeting and any big service business wants to enter.

In sheer scale, however, the US economy still counts far more for the growth and prosperity of the world economy. A 1 per cent rise in US output is worth 6 per cent in China (or the UK). So the US locomotive’s unexpectedly sharp slowdown in the spring is a potential worry to all.

But potential is the operative word. The latest downward statistical revisions suggest that the US economy has been growing at about 3.2 per cent a year since it emerged from its post-bubble mini-recession. That is down from 4.2 per cent in the late 1990s, So one quarter of 2.5 per cent growth is no cause for panic.

The slowdown shows Americans have been finding their wallets empty after two years of relentless interest-rate rises swelled mortgage charges just in time for oil shortages to work through to low-taxed motor fuel. No wonder Americans had no heart for car-buying.

For Ben Bernanke and his colleagues at the Federal Reserve, the central banker’s dilemma of falling growth and rising inflation is hardly worth the name. Core inflation is up to 2.9 per cent but that may be a one-off reaction to higher energy prices. In a bankers’ world, business could not pass costs on. But it would make no sense to keep raising rates now.

The 17 rate rises are having their effect; if they did not, the Fed might as well give up. The house price stampede, source of so many local doom scenarios, seems to have been corralled and there is little sign of the rest of the economy overheating. Rather, US business needs a new stimulus.

If only the Chinese authorities would co-operate, that should come by the dollar falling against Asian currencies in time for the IMF’s September meeting. That would be good for China, good for the US and good for the world economy.

Another German Wal tumbles

SO THE Beast of Bentonville is not quite as all-powerful as thought. Wal-Mart may be the biggest retailer in the world but is it only really at home in North America? Wal-Mart’s German foray is certainly ending in tears. And although Wal-Mart Germany was never made much of an impression, the $1 billion (£540 million) costs incurred on the sale to Metro will hurt. Trading losses incurred in past years rub salt in the wounds.

Wal-Mart has already made its excuses and backed out of South Korea. Nothwithstanding some positive-ish murmurings on Japan yesterday, WalMart is thought to be struggling there too.

And what about Asda, the largest of Wal-Mart’s overseas ventures?It would be a mistake to extrapolate from the German decision. Wal-Mart is most unlikely to retreat from the UK anytime soon. But even here, Wal-Mart’s has not shaken the supermarket industry in the way many feared. It has made its presence felt in terms of keen pricing. But who is to say that supermarkets would not have taken to cost consciousness anyway. Again it would be wrong to suggest that Asda is failing in the UK, or has failed in the past. But it has endured periods of weakness.

In retailing, as in many other walks of life, markets have local cultures and local limitations. Wal-Mart’s pile it high, sell it cheap recipe suceeds in the US because there no shortage of space to build big stores. Planning constraints meant that Wal-Mart could not do the same in Germany. The days of building football pitch sized supermarkets in the UK are over too. German regulations on pricing and discounting also neutralise some advantages Wal-Mart might have enjoyed.

With Asda in the UK, WalMart is adapting more succesfully to local ways particularly when it comes to store sizes. Just as encouragingly, it seems that Tesco’s international expansion plans are flexible. Whether they are flexible enough to cope with all the stresses of foreign adventures, however, remains to be seen.

High-flyer?

Charles Allen is embattled as chief executive of ITV. The advertising market is weak and ITV’s segment is weaker than most. Programmes are panned by critics and shunned by viewers. But Mr Allen is no stranger to the high wire act. He survived the ONdigital debacle and it was Michael Green, not Mr Allen, who fell because of investor displeasure at the way Carlton/Granada planned to carve out the board jobs. Mr Allen will need all his talents, and some luck, to survive this time. But he does have a head for precarious heights.

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