IMF warns of deterioration in China’s real estate market | Wilnesh News

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.

In recent months, China has announced various measures aimed at boosting declining economic growth. In September, the People’s Bank of China announced a series of support measures, such as reducing the amount of cash on hand in banks.

Just days later, China’s top leaders said they were aiming to stem the downturn in the real estate sector, saying it needed to halt the sector’s decline and encourage a recovery. Major cities such as Guangzhou and Shanghai have also introduced measures aimed at boosting home-buying sentiment.

China’s finance minister suggested earlier this month that the country had 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. Meanwhile, China’s Ministry of Housing and Urban-Rural Development announced it was expanding its “white list” of real estate projects and accelerating bank lending for 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.

“They (recent support measures) may bring some upside risks on the output side, but that’s 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 economic performance. Not good and then need support we don’t know yet.

China last week reported third-quarter gross domestic product growth of 4.6%, 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.”