The Spillover Effects Of A Downturn In Chinas Real Estate Investment
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| Author | : Mr.Ashvin Ahuja |
| Publisher | : International Monetary Fund |
| Total Pages | : 24 |
| Release | : 2012-11-05 |
| Genre | : Business & Economics |
| ISBN | : 1475560664 |
Real estate investment accounts for a quarter of total fixed asset investment (FAI) in China. The real estate sector’s extensive industrial and financial linkages make it a special type of economic activity, especially where the credit creation process relies primarily on collateral, like in China. As a result, the impact on economic activity of a collapse in real estate investment in China—though a low-probability event—would be sizable, with large spillovers to a number of China’s trading partners. Using a two-region factor-augmented vector autoregression model that allows for interaction between China and the rest of the G20 economies, we find that a 1-percent decline in China’s real estate investment would shave about 0.1 percent off China’s real GDP within the first year, with negative spillover impacts to China’s G20 trading partners that would cause global output to decline by roughly 0.05 percent from baseline. Japan, Korea, and Germany would be among the hardest hit. In that event, commodity prices, especially metal prices, could fall by as much as 0.8–2.2 percent below baseline one year after the shock.
| Author | : Mr.Ashvin Ahuja |
| Publisher | : International Monetary Fund |
| Total Pages | : 24 |
| Release | : 2012-11-05 |
| Genre | : Business & Economics |
| ISBN | : 1475549008 |
Real estate investment accounts for a quarter of total fixed asset investment (FAI) in China. The real estate sector’s extensive industrial and financial linkages make it a special type of economic activity, especially where the credit creation process relies primarily on collateral, like in China. As a result, the impact on economic activity of a collapse in real estate investment in China—though a low-probability event—would be sizable, with large spillovers to a number of China’s trading partners. Using a two-region factor-augmented vector autoregression model that allows for interaction between China and the rest of the G20 economies, we find that a 1-percent decline in China’s real estate investment would shave about 0.1 percent off China’s real GDP within the first year, with negative spillover impacts to China’s G20 trading partners that would cause global output to decline by roughly 0.05 percent from baseline. Japan, Korea, and Germany would be among the hardest hit. In that event, commodity prices, especially metal prices, could fall by as much as 0.8–2.2 percent below baseline one year after the shock.
| Author | : International Monetary Fund |
| Publisher | : International Monetary Fund |
| Total Pages | : 147 |
| Release | : 2012-10-07 |
| Genre | : Business & Economics |
| ISBN | : 1498340245 |
This note conducts a business cycle accounting analysis for systemic economies, with an emphasis on spillover effects from macroeconomic versus financial shocks. The systemic economies under consideration are China, the Euro Area, Japan, the United Kingdom, and the United States. This analysis is based on historical decompositions of output growth derived from the estimated structural macroeconometric model of the world economy, disaggregated into thirty five national economies, documented in Vitek (2012). Within this framework, each economy is represented by interconnected real, external, monetary, fiscal, and financial sectors. Spillovers are transmitted across economies via trade, financial, and commodity price linkages
| Author | : Mr.Anoop Singh |
| Publisher | : International Monetary Fund |
| Total Pages | : 292 |
| Release | : 2013-11-07 |
| Genre | : Business & Economics |
| ISBN | : 1484303938 |
China's current account surplus has declined to around one-quarter the peak reached before the global financial crisis. While this is a major reduction in China's external imbalance, it has not been accompanied by a decisive shift toward consumption-based growth. Instead, the compression in its external surplus has been accomplished through increasing fixed investment so that it is now an even higher share of China's national economy. This increasing reliance on fixed investment as the main driver of China's growth raises questions about the durability of the compression in the external surplus and the sustainability of the current growth model that has had unprecedented success in lifting about 500 million people out of poverty over the last three decades. This volume examines various aspects of the rebalancing process underway in China, highlighting policy lessons for achieving stable, sustainable, and inclusive growth.
| Author | : Mr.Ashvin Ahuja |
| Publisher | : International Monetary Fund |
| Total Pages | : 23 |
| Release | : 2012-11-06 |
| Genre | : Business & Economics |
| ISBN | : 1475515057 |
Over the past decade, China’s growth model has become more reliant on investment and its footprint in global imports has widened substantially. Several economies within China’s supply chain are increasingly exposed to its investment-led growth and face growing risks from a deceleration in investment in China. This note quantifies potential global spillovers from an investment slowdown in China. It finds that a one percentage point slowdown in investment in China is associated with a reduction of global growth of just under one-tenth of a percentage point. The impact is about five times larger than in 2002. Regional supply chain economies and commodity exporters with relatively less diversified economies are most vulnerable to an investment slowdown in China. The spillover effects also register strongly across a range of macroeconomic, trade, and financial variables among G20 trading partners.
| Author | : Rui Mano |
| Publisher | : International Monetary Fund |
| Total Pages | : 38 |
| Release | : 2016-11-15 |
| Genre | : Business & Economics |
| ISBN | : 1475553749 |
This paper assesses the spillovers from different facets of China rebalancing using a calibrated Ricardian trade model that includes 41 economies, each consisting of 34 sectors. We find that China’s move up the value chain in particular has the potential for significant spillovers – on the one hand, adversely affecting industrialized economies heavily involved in the Asia value chain, while at the same time generating positive spillovers to lower and middle income countries. The model’s strength lies in endogenously capturing production value chains and international trade of goods across sectors.
| Author | : Allan Dizioli |
| Publisher | : International Monetary Fund |
| Total Pages | : 35 |
| Release | : 2016-08-20 |
| Genre | : Business & Economics |
| ISBN | : 1475528949 |
After many years of rapid expansion, China’s growth is slowing to more sustainable levels and is rebalancing, with consumption becoming the main growth driver. This transition is likely to have negative effects on its trading partners in the near term. This paper studies the potential spillovers to the ASEAN-5 economies through trade, commodity prices, and financial markets. It finds that countries with closer trade linkages with China (Malaysia, Singapore, and Thailand) and net commodity exporters (Indonesia and Malaysia) would suffer the largest impact, with growth falling between 0.2 and 0.5 percentage points in response to a decline in China’s growth by 1 percentage point depending on the model used and the nature of the shock. The impact could be larger if China’s slowdown and rebalancing coincides with bouts of global financial volatility. There are also opportunities from China’s rebalancing, both in merchandise and services trade, and there is preliminary evidence that some ASEAN-5 economies are already benefiting from these trends.
| Author | : Mr.Paul Cashin |
| Publisher | : International Monetary Fund |
| Total Pages | : 22 |
| Release | : 2016-03-15 |
| Genre | : Business & Economics |
| ISBN | : 1513590456 |
China's GDP growth slowdown and a surge in global financial market volatility could both adversely affect an already weak global economic recovery. To quantify the global macroeconomic consequences of these shocks, we employ a GVAR model estimated for 26 countries/regions over the period 1981Q1 to 2013Q1. Our results indicate that (i) a one percent permanent negative GDP shock in China (equivalent to a one-off one percent growth shock) could have significant global macroeconomic repercussions, with world growth reducing by 0.23 percentage points in the short-run; and (ii) a surge in global financial market volatility could translate into a fall in world economic growth of around 0.29 percentage points, but it could also have negative short-run impacts on global equity markets, oil prices and long-term interest rates.
| Author | : WorldBank |
| Publisher | : World Bank Publications |
| Total Pages | : 286 |
| Release | : 2016-01-21 |
| Genre | : Business & Economics |
| ISBN | : 1464806764 |
The January 2016 edition of Global Economic Prospects discusses current global and regional economic developments and prospects, analyzing key challenges and opportunities confronting developing countries. This volume addresses, among other topics, spillovers from large emerging markets and macroeconomic vulnerabilities during resource development. Global Economic Prospects is a World Bank Group Flagship Report. Semiannually (January and June), it examines global economic developments and prospects, with a special focus on developing countries. The report includes analysis of topical policy challenges faced by developing countries through in-depth research in the January edition and shorter analytical pieces in the June edition.
| Author | : International Monetary Fund |
| Publisher | : International Monetary Fund |
| Total Pages | : 75 |
| Release | : 2012-07-24 |
| Genre | : Business & Economics |
| ISBN | : 1475505469 |
China’s economy has been moderate in 2012, with a GDP growth of about 8 percent. Macroeconomic policies helped to maintain sustainable growth and continued to be adjusted in line with evolving conditions. The 2012 fiscal stance balanced the past stimulus with the growing economy. The authorities have taken necessary steps to accelerate the implementation of approved projects. Directors encouraged the authorities to accelerate the transformation of China’s economy as conceived under the 12th Five-Year Plan.
