Evergrande’s risks for Chinese economy ‘contained’, says IMF official

(Bloomberg) – The risks to the economy linked to the collapse of the China Evergrande group are “contained” for the moment, according to a senior official at the International Monetary Fund.

“People understand that the government has the tools to contain the risks going forward,” Helge Berger, the fund’s chief mission in China, told Bloomberg Television. Risks in the real estate sector are limited to the sector for now, but authorities should continue to monitor in case they escalate, he said.

China’s real estate sector is heavily indebted and authorities’ efforts to deleverage are welcome, Berger said, but they must be careful not to go too fast or too slow.

Developer China Evergrande Group’s debt crisis has intensified the slowdown in the country’s real estate sector and weighed on the economic outlook. China’s real estate and construction industries contracted in the third quarter for the first time since the start of the pandemic.

The IMF lowered its growth forecast for China and the Asia-Pacific region this year due to an increase in the delta variant and a delay in vaccinations. China’s forecast has been lowered to 8% from 8.4% to reflect ongoing outbreaks of the virus, tightening fiscal policy and tensions in the real estate sector.

© 2021 Bloomberg LP


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