Home » Business » Real Estate
World bank notes real estate risks
Print Edition
THE World Bank has cut its 2014-2016 growth forecasts for developing East Asia, noting that China was likely to slow due to policies aimed at putting the economy on a more sustainable footing. It also cautioned of capital-flight risks to Indonesia.
China’s economy has struggled to recover from a soft start to the year when growth slowed to its weakest in 18 months in the first quarter.
The government has indicated it is prepared to accept slower growth as it tries to wean the world’s second-biggest economy away from dependence on investment and exports in favor of consumption.
But a slowdown in the housing market has become an increasing drag on the broader economy, prompting Beijing and local governments to step up efforts to restore momentum.
The report noted potential risks in the region’s real estate markets. There was slim evidence of price bubbles in the larger economies, which limited chances of “significant” house price corrections. But an abrupt financial tightening could trigger a disorderly adjustment of housing prices.
“A major nationwide correction in real estate prices in China remains unlikely, although there may be pressure on prices in several of the less rapidly growing provinces,” the World Bank said.
The Washington-based lender expects the developing East Asia and Pacific region to grow 6.9 percent in 2014 and 2015, down from the 7.1 percent rate it had previously forecast for both. Growth in 2013 had been 7.2 percent. The bank also trimmed its 2016 growth forecast for the region to 6.8 percent from a previous 7.1 percent.
“The main message of this report is one that I would categorize as cautious optimism,” World Bank East Asia and Pacific Chief Economist Sudhir Shetty said at a media briefing on the latest East Asia Pacific Economic Update yesterday.
Possible risks to the outlook include a recovery in global trade that is weaker than expected and any abrupt rise in global interest rates, the report said, adding that its baseline scenario was based on an orderly normalization of monetary policy in the United States.
The World Bank said growth in China was likely to slow to 7.4 percent in 2014 and 7.2 percent in 2015, down from 7.7 percent in 2013. Growth in 2016 was put at 7.1 percent.
The World Bank had previously seen China’s growth coming in at 7.6 percent in 2014 and 7.5 percent in 2015 and 2016.
“Measures to contain local government debt, curb shadow banking, and tackle excess capacity, high energy demand, and high pollution will reduce investment and manufacturing output,” it said of China.
Growth in developing East Asia and Pacific excluding China will slow to 4.8 percent in 2014 from 5.2 percent in 2013 due to the slowing economies of Indonesia and Thailand, the World Bank said, adding that growth could rise to 5.3 percent in 2015.
While the region’s vulnerabilities to capital-flow reversals have decreased over the past year, Indonesia remains relatively exposed due to its high short-term external financing needs, it said.
The US Federal Reserve is expected to start raising interest rates at some point next year, with analysts expecting a more aggressive tightening-cycle to potentially trigger a flight of capital from emerging markets.
Another risk to the region would be a sharp slowdown in China, but Beijing has fiscal buffers to provide economic stimulus, or to bail out banks if non-performing loans emerge, the World Bank said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
