Australian shares are set for a modest opening decline, following a mixed session in New York. $A little changed. ECB rate decision later. Follow updates here.
Ian Bremmer, who is president of political risk research firm Eurasia Group, said after forty years of extraordinary growth, China’s economy may be entering an era of stagnation.
The IMF is forecasting China’s economy will expand at less than 4 per cent “in the coming years”, Mr Bremmer said, contrasting that with previous 10 per cent rates and the government’s official 5 per cent target. “Property prices are crashing. Household wealth is getting wiped out. Borrowers are defaulting on their mortgages, in turn leading developers and lenders to default. Credit is flat lining. Revenues for local governments are drying up at the same time as their debt servicing costs rise.”
“The obvious thing Beijing could do to stimulate growth in the short term would be to give direct fiscal stimulus to consumers . Consumer stimulus would also be a step in the right direction toward the kind of structural reform China needs to achieve more balanced and sustainable growth in the long term.”
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