Stock markets in China closed lower on Friday despite a series of measures to shore up the ailing real estate sector, as the International Monetary Fund (IMF) forecast a slowdown in its economy in the coming years.
In its report, the IMF forecast that the economy will grow at an annual rate of 4.6% this year, compared to 5.2% in 2023. It noted that growth in 2028 will be 3.4%. He noted that housing construction was down more than 60% from pre-pandemic levels after crackdowns on excessive borrowing starting in 2020.
That is a pace “seen only in the biggest domestic real estate crises in the past three decades,” the IMF said.
Shanghai’s benchmark index fell 1.5% as it closed its worst week in five years. The smaller Shenzhen market closed down 3%.
The measures to raise the supply of affordable housing and stimulate demand came weeks before senior officials gather in Beijing for the annual session of the national congress, an occasion at which the ruling Communist Party seeks to show off its leadership.
The woes of the real estate sector were highlighted days ago when a Hong Kong court ordered the liquidation of China Evergrande, the world’s most indebted real estate company, with liabilities in excess of $300 billion.
China’s real estate sector accounts for almost a third of the country’s economic activity, and its crisis has affected growth and depleted the confidence of both investors and consumers.
The country’s economy grew 5.2% in 2023, but a slowdown is forecast for this year.
The sluggish real estate market has also deprived the government of revenue from land-use sales, which has increased public debt. The Finance Ministry reported Thursday that revenue from land sales fell 13.2% in 2023 compared to the previous year.