The International Monetary Fund (IMF) said that China’s worsening real estate crisis would be among the risks undermining global economic prospects.

In the World Economic Outlook published this week, the IMF said that global economic activity is experiencing a broad-based and sharper-than-expected slowdown.

The fund predicts global growth will slow from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023.

The global economic outlook allegedly depends on three factors:

  • A successful calibration of monetary and fiscal policies
  • The course of the Ukraine-Russia war
  • China’s growth prospects

Regarding China, the IMF pointed out that the frequent lockdowns under its zero-COVID policy have taken a toll on the world’s second-largest economy, especially in the year’s second quarter.

The lockdowns have imposed sizable constraints domestically and gummed up already strained global supply chains.

In addition, the real estate sector, historically an engine of growth for China’s economy, is rapidly weakening.

This sector represents about one-fifth of the economic activity in China. So a worsening real estate sector crisis could spill over to the domestic banking sector and dampen the country’s economic growth, with adverse cross-border effects.

The IMF wrote, “In China, output growth has slowed with the COVID-19 outbreaks and troubles in the property sector.”

The fund predicted that China’s economic growth would slow from 8.1% last year to 3.2% this year and 4.4% next year.

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