Economic growth in Asia to be even slower than predicted

Real Estate
Team MONEYME|30 September 2022| 2-minute read

In July, the Asian Development Bank (ADB) announced that economic growth in Asia will likely be slower than predicted.

Three factors are impacting this: China’s continued COVID-19 lockdowns, the Russian invasion of Ukraine and increasing interest rates around the world.

The nitty gritty

More specifically, the ADB said developing economies in Asia would grow at an average of 4.6% in 2022 and 5.2% in 2023—down from the ABD’s forecast in April of 5.2% and 5.3%.

For China, the figure is 4%. However, India stands to fare better, at 7.2%. Meanwhile, Pacific nations are looking at 4.7% growth, which is better than expected, thanks to Fiji’s post-lockdown popularity among Western tourists.

Impact on Australia

Linked to China’s slowed growth is the retraction of its property market. Sales are expected to drop by up to 30% in 2022.

This means less construction, which means less demand for steel, which means less demand for iron ore. In 2020, 35% of Australia’s total exports comprised iron ore to China, valued at $93.2 billion.

Therefore, the fall in demand could slow Australian growth further, which the Reserve Bank already predicts to decrease from 3.25% in 2022 to 1.75% in 2023.

Further, there’s a chance that Chinese investment in Australia, which decreased by 70% from 2021 to 2020 from US$1.9 billion to US$600 million, could continue to decrease.

What does this mean for real estate agents?

It might seem that slow economic growth means doom and gloom for real estate agents. But this need not be the case.

Instead, with some clever pivoting, you can take advantage of opportunities. You might tap buyers who want to make the most of falling house prices, or focus on areas that continue to grow, such as large regional centres like Wollongong and Newcastle.

Plus, you might find you have more time to spend on marketing, particularly digital marketing, which is so important to building relationships with potential future buyers.

Key takeaways

  • Economic growth in Asia is likely to be slower than predicted in 2022 and 2023.
  • The retraction of China’s property market could result in less demand for iron ore.
  • Australia’s exports of iron ore comprised 35% of all Australian exports in 2020.
  • Real estate agents can get ahead during periods of slow growth by pivoting to new buyers and new areas, and focusing on marketing.

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