China’s economy will grow less than previously thought this year and next as a struggling property market dogs what was once the world’s growth engine, according to a Reuters poll of economists who said the risks were skewed to further downgrades, reports Reuters. The world’s second-largest economy has been struggling after a brief post-COVID recovery, dragged by huge debt due to decades of infrastructure investment and a property downturn, posing risks not only to itself but also to the global economy.
With 70% of household wealth tied up in the ailing property market, coupled with rising youth unemployment, weak consumption demand and the reluctance by depressed private firms to invest, policymakers have been fighting an uphill job in reviving growth.
“The primary culprit is the property sector. This source of growth has now evaporated and won’t be coming back,” said Julian Evans-Pritchard, head of China economics at Capital Economics in Singapore.
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