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The International Monetary Fund (IMF) cautioned about a possible deterioration in China’s property market and revised down its growth forecasts for the country. According to the IMF’s report released on Tuesday, China’s growth for this year is now expected to be 4.8%, down 0.2 percentage points from its previous projection in July. The IMF also anticipates growth of 4.5% in 2025, highlighting the contraction of China’s property sector as a key downside risk to the global economic outlook.
The report mentioned that the conditions in the real estate market could worsen, leading to further price corrections due to a decline in sales and investment. The IMF compared the situation to historical property crises in other countries like Japan in the 1990s and the U.S. in 2008, warning that failing to address the crisis in China could result in further price corrections, lower consumer confidence, reduced household consumption, and domestic demand.
Amid concerns, China has implemented various measures to bolster its slowing economic growth. Recent initiatives include the People’s Bank of China reducing the amount of cash banks are required to hold, top leaders aiming to halt the property sector slump, and major cities unveiling measures to boost homebuyer sentiment. Furthermore, the Chinese Minister of Finance hinted at the potential for increased debt and deficit spending to stimulate the economy.
While some of these measures have been factored into the IMF’s latest projections, the agency’s chief economist noted that more support may be necessary to significantly impact the growth rates. The recent stimulus measures could present upside risks in terms of output, but uncertainties remain regarding the extent of support needed to stabilize the economy.
China recently reported third-quarter GDP growth slightly above expectations, but the IMF also highlighted potential risks associated with government stimulus measures, including strains on public finances and exacerbating trade tensions with China’s trading partners.
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Lucas Bennett, completed his Finance degree at Bocconi University in Italy in 2018. He is highly skilled in corporate finance and risk management, beginning his career at a hedge fund in Milan. Lucas expertise extends to consulting for leading European firms, particularly within the energy markets sector. His analytical skills and strategic mindset have made him a sought-after consultant, and he continues to explore new opportunities within the financial services industry across Europe.
