As China’s real estate sector faces debt woes for skipping payments amounting to hundreds of billions of dollars, the world holds its breath as it awaits any economic repercussions that could ripple to other countries around the globe.
Any slowdown in China’s economy will certainly affect its key trading and tourism partners, said the Bankgko Sentral ng Pilipinas (BSP).
MANILA — In a press conference, BSP Governor Benjamin Diokno said that “China is the country’s largest trading partner, accounting for 16 percent of our exports.”
In July alone, data from the Philippine Statistics Office show that shipments to China had the highest export value of $1.04 billion. It accounts for 16.1 percent of the Philippines’ overall exports.
At risk of seeing lower production volumes as fresh order from overseas workers dwindle, according to Mr Diokno, are domestic enterprises that directly deal with China. They will impact the country’s overall output.
“In addition, China plays a pivotal role in the Philippines’ tourism sector’s recovery. Prior to the pandemic, Chinese tourists accounted for 21 percent of the 8.3 million foreign visitors in the Philippines, the second biggest after South Korea’s share of 24.1 percent,” he said.
Trading partners such as the United States and the European Union can provide a cushion for exports, the central bank chief said as the country continues to recover.
In 2021, the central banks see a 14-percent increase in export of goods as Mr Diokno pointed out the latest World Economic Outlook forecasts of the International Monetary Fund on advanced economies are to grow 5.6 percent this year. Its forecast of the U.S. economy is a 7-percent growth.
It is vital that visitor markets like South Korea, the United States, and Japan, in the case of tourism, be sustained.
“The growth of other visitor markets like South Korea, U.S., and Japan will be vital in ensuring the sustainable recovery of the tourism sector and the broad domestic economy,” said Mr Diokno.
A slowdown in china’s real estate market would impair growth more generally, particularly through lower commodity prices, which would hurt raw material exports, said Oxford Economics in a report.
According to the ANZ Research, the Chinese economy faces near-term downside risks due to deleveraging in the housing market and supply-side restrictions. There are other risks at stake though.
“As the risks are brought about by Aside from the property sector, China’s economic recovery of late has been dampened by two major supply-side constraints, that is, the authorities’ decarbonization efforts and the global chip shortage,” it pointed out. (RA/The MiNT)