Analysts: China’s annual economic growth will be low
Experts began to revise their forecasts of China’s market development since March of this year. For some time they noted that China’s economic growth will be about 5.5%, but now the indicators at the level of 3.5% are relevant.
Last month analysts saw signs of recovery, as the dynamics were higher than in the previous period. Rising retail sales and increased investment added to the optimism. In addition, the urban unemployment rate dropped to 5.3%. Around this period, the government introduced subsidies for the purchase of electric cars, which boosted their sales. Coal-fired electricity production increased by almost 15%, and aluminum production increased by 10%.
To stabilize the difficult situation in the construction sector, the government introduced special support programs. There was an increase in infrastructure funds allocated by the government. As one of the options for stimulating the local economy, the Chinese Central Bank has reduced interest rates. Despite this, Macquarie Group analysts believe that such measures will not seriously affect the growth figures. China’s economy is going through tough times right now, and the year-to-date results will be lower than even in 2020.Summer residential real estate sales in the country were 30% lower than the previous year. The total amount was about $129 billion. Since August, the market has seen a decline in the number of transactions, a trend that continues now. Cement production is down 13%, although it was down 9% as recently as last month.
According to analysts from Morgan Stanley, there are more risks that negatively affect the growth of the Chinese economy. Therefore, we should be guided by the annual development indicator of 3.5%. Forecasts experts from Barclays even lower – 2.6%.
It is expected that the crisis in the real estate market will continue in 2023, and sales growth is not yet necessary to wait. In addition, the consumer confidence index is the lowest in the last 10 years. The Chinese government has tried to reduce the number of risky debts of local developers, but as a result, the situation worsened and led to a crisis in the entire real estate market. Major developers could not cope with the difficulties and defaulted, resulting in many projects being stopped. In turn, this affected the homeowners who have not received their apartments and refused to pay the mortgage.
As for other sectors of the economy, things are not going well there either. The tourism industry is practically on pause, in addition, analysts predict a decline in oil demand of about 2.7%, which was last seen in 1990.