Flagging consumer confidence and domestic property issues are set to impact China’s economy, leading the IMF to lower its 2024 growth forecast to 4.8%, down from 5% in July. The IMF’s “World Economic Outlook” highlights concerns about real estate market conditions worsening, with price corrections and a slowdown in sales and investment.
The report acknowledges Beijing’s economic stimulus efforts, including rate cuts, debt relief, and government bond issuance. However, the IMF warns that this may not be enough to offset the negative effects of the property market challenges.
This could cause domestic demand to falter, with negative spillovers to both advanced and emerging market economies given China’s rising footprint in global trade.
Property issues have been ongoing since 2020, with new regulations, developer defaults, and falling home prices contributing to the current economic challenges in China.