Source: Bloomberg

Author: Tom Hancock

Bloomberg economic research analysis said that if the real estate market collapse -government stimulus measures are still not enough to turn the tide -then China's economic growth rate in the next two years will not exceed 3%.The analysis report of Bloomberg Economic Research highlights the importance of real estate to the recovery of China's economic recovery.

Economist Shu Chang, Eric Zhu, and ANA Galvao wrote in a report that discussed the "sudden collapse" scene in the industry that if real estate investment fell by 15%in the next year (this is not the basic growth situation of Bloomberg's economic research),Then it will cause "collision landing" and "devastating strikes" to the Chinese economy.This model of Bloomberg Economic Research explores the impact of real estate collapse through investment and bank loan changes and increasing uncertainty, which has on economic growth.

They estimate that assuming the government takes stimulus measures to curb this crisis by reducing policy interest rates and expanding fiscal deficit, the decline in the real estate market will lead to the growth rate of GDP (GDP) to 2.9%in 2023.It fell to 2.8%in 2024.Bloomberg Economic Research currently predicts that GDP will increase by 5.8%this year.

China's GDP last year increased by 3%, the second lowest level since the 1970s.

These Bloomberg economists wrote that if there is no policy response, the economic decline will be more serious: this year's GDP will only increase by 1.9%and will shrink by 0.4%next year.In this case, this real estate crisis will affect the global market.The VIX index will soar 10 points, which is consistent with the among Chinese stock market collapse and the depreciation of the renminbi in 2015.

They wrote that if such a crisis really happened, the Beijing side may regard "all efforts to offset this drag" regardless of concerns about government debt, including the decline in policy interest rates in the first year of the first year.A basis.In the scenario that contains policy support, the fiscal deficit will have a 2%growth of GDP.

"If the slow decline in China's real estate market has evolved into a sudden collapse, what will happen? This is not the basic situation of Bloomberg's economic research -we think Beijing has tools for preventing crises. However, serious excessive construction and high highLiabilities mean that the collapse is a real risk, "said the above economist.

The basic scene of

Bloomberg Economic Research is that real estate investment will decrease 3%from 2022 this year.Other economists predict that this year's investment will be flat or achieved low -digit growth -to reverse the 10%shrinking situation last year, as the government has issued new policies to support the industry.

Whether housing investment will recover this year is one of the main uncertain factors facing the Chinese economy.Official data show that real estate investment in the first two months of this year fell 5.7%compared with the same period of 2022.