Tuesday, January 14, 2025
HomeEconomyIMF warns of deterioration in China's real estate market | Real Time...

IMF warns of deterioration in China’s real estate market | Real Time Headlines

Chinese flags are for sale on Nanjing East Road in Shanghai, China, Wednesday, October 2, 2024.

Shen Qilai | Bloomberg | Getty Images

The International Monetary Fund (IMF) has cut its growth forecast for the world’s second-largest economy, warning that conditions in China’s property market may worsen.

in a report A report released by the International Monetary Fund on Tuesday lowered China’s economic growth forecast for this year to 4.8%, 0.2 percentage points lower than the forecast in July. According to the International Monetary Fund, the economic growth rate in 2025 is estimated to be 4.5%.

The Washington, D.C.-based organization also highlighted a larger-than-expected shrinkage in China’s real estate industry as one of many downside risks to the global economic outlook.

“Property market conditions are likely to worsen as sales and investment contract and prices adjust further,” the report said.

The International Monetary Fund’s World Economic Outlook notes that historical real estate crises in other countries, such as Japan (1990s) and the United States (2008), indicate that unless China’s crisis is resolved, further price adjustments are likely. This, in turn, could lead to a decline in consumer confidence and reduce household consumption and domestic demand, the agency explained.

IMF chief economist says China's economic stimulus measures are

In recent months, China has announced various measures aimed at boosting declining economic growth. In September, the People’s Bank of China announced Support list, e.g. Reduce cash amount Banks are required to have it on hand.

A few days later, China’s top leaders said they Aiming to arrest real estate industry downturnsaid there was a need to halt its decline and encourage its recovery. Big cities such as Guangzhou and Shanghai also Measures aimed at boosting homebuyer sentiment were unveiled.

Earlier this month, China’s Finance Minister Suggesting the country has room to increase its debt and deficit. Lanfoian said more stimulus is on the way and policy changes around debt and deficits could come soon. this China’s Ministry of Housing and Urban-Rural Development also announced It is expanding its “white list” of real estate projects and speeding up bank lending to these unfinished developments.

IMF chief economist Pierre-Olivier Gurinchas told CNBC’s Karen Zo on Tuesday that some of the measures taken by Chinese authorities have been factored into the IMF’s latest forecasts.

“They are certainly moving in the right direction, but not enough to change our forecast of 4.8% this year and 4.5% next year,” he said, noting that recent measures are still being evaluated and are already being implemented. It has not yet been included in the agency’s forecasts.

IMF's Adrian says economic uncertainty ahead of this year's elections

“They (recent support measures) may bring some upside risks on the output side, but this is against the backdrop of a disappointing decline in China’s economic activity in the third quarter, so on the one hand, we have tensions with the performance of the economy Not good and then need support we don’t know yet.

China reported last week Gross domestic product grew 4.6% in the third quarter, slightly higher than the 4.5% forecast by economists polled by Reuters.

The International Monetary Fund also pointed out the potential risks of economic measures in its report.

The agency said: “The government’s stimulus measures to respond to weak domestic demand will put further pressure on public finances. Subsidies in certain industries may exacerbate trade tensions with China’s trading partners if they are aimed at promoting exports.”

S&P Global Vice Chairman: Energy markets are currently in a
RELATED ARTICLES

Most Popular

Recent Comments