new focus global instability What does war mean? Israel against Hamas inside Middle East opened another crack in global growth expectations. Financial analysts are currently examining the economic consequences this could have. war conflictadded to this Ukraine war and Geostrategic struggles between China and the USA They shatter investment banks’ already uncertain forecasts. Analysts at Generali Investments, for example, have already pointed out the first worrying outlines of a situation that overshadows growth and confirms uncertainties.
However, the Generali report published this Monday points out that the slowdown in China’s economic growth is the most worrying element and has the most impact on the development of the world economy for the next year. In the Eurozone, most analyzes continue to predict a “moderate recession in Germany” and stagnation in most other countries. But Chinese real estate crisis This marks a clear slowdown in past growth, which was unsustainable in the face of the growth of the Asian giant’s social structure. China’s growth of 4 percent may seem normal, but this represents a slowdown with planetary implications; this is the weakest rate since 1990 (excluding the 2020 pandemic).
Just from a statistical perspective, real estate sector is represented Chinese About 7% of GDP from the country. However, if all sub-sectors are included (building materials, road transport, real estate support companies and, of course, the white goods sector), the size of the real estate crisis represents approximately a quarter (25%) of the world’s population. Chinese GDP. The volume of mortgages in force in China is also quite high; According to Eurizon data, it corresponds to 29 percent of GDP. A real estate crisis can have significant impacts on your financial system. The total value of the real estate sector, including private and commercial properties, accounts for 220% of GDP, making the sector nominally the second largest in the world. This rate is 165% in the USA and 360% in the UK.
oil prices
The only positive element of this slowdown in China’s growth is that it also curbs the rise in energy prices that fueled the wars in Ukraine and Israel. A weak China tends to consume less oil. In this sense, the expected slowdown in Western economies will depend on the monetary policies implemented rather than the energy bill and imports. Except for the unforeseen blockage of the Suez Canal.
Experts at Swiss investment bank Julius Baer believe that the latest data on the Chinese economy indicates that growth stability may be better in September. “We expect China’s third-quarter GDP report to show a slight slowdown in growth, particularly due to weak economic activity in July, and September economic activity to stabilize towards the end of the quarter,” they said in a statement on Monday. .
evolution of species
As a result of this macroeconomic environment, Central banks in the West face a dilemma It is increasingly driven by faltering growth (with the risk of excessive tightening of monetary policy) and the need to tightly control price increases, which are still too high and require immediate wage increases that have nothing to do with competitiveness. It should not be forgotten that the productivity of countries does not result from low wage costs, but from the sale of high value-added, high-priced products and services. Undervalued templates sooner or later lead to lower quality and less competitive products and services.
The recent rise in energy prices amid OPEC+’s production cuts further complicates the picture. Moreover, long-term inflation expectations continue to question the credibility of central banks’ 2% target. Generali experts believe that although major Western central banks have likely reached their maximum rates, they will have to maintain current restrictive rates for longer, limiting recovery prospects for 2024.