ECB Rate Hikes, EU Growth, China’s Sharp Economic Jolt: Eco Day
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Welcome to Monday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:
China’s economy contracted in April, with Covid outbreaks and lockdowns dragging the industrial and consumer sectors down to the weakest levels since early 2020 as millions of residents were confined to their homes and factories were forced to halt production.
China’s central bank refrained from cutting interest rates despite mounting evidence of a sharp slowdown in economic growth, suggesting policy makers may be concerned about the currency’s depreciation and capital outflows.
Apollo Global Management Inc. is planning to lend about $1 billion to developers in India this year, betting on a recovery in the residential property market as the pandemic eases.
The UK is fast becoming the epicenter of the global stagflation crisis, as the Bank of England’s policy-tightening campaign and the soaring cost of living put the world’s fifth-biggest economy on the verge of recession.
Jan 26, 2017
Reuters
Royal Bank of Canada (RY.TO) warned on Thursday that policymakers are more likely to introduce measures to cool the Toronto housing market after home sales hit a record high in 2016.
"The likelihood of policy intervention to address housing risks in Toronto is increasing," economists at Canada's biggest bank said in its January Canadian Housing Health Check.
RBC did not specify whether further moves would be introduced by the federal government, the provincial government in Ontario or Canada's financial regulator.
Canada's finance ministry last year implemented stricter rules for mortgage providers while the provincial government in British Columbia slapped a 15 per cent tax on foreign buyers to help bring prices down in the sky-high Vancouver market and make prices more affordable for ordinary people.
Separately, Canada's federal housing agency on Thursday said that, for the second quarter in a row, overvaluation and price acceleration were causing stresses in the housing market.
The Canada Mortgage and Housing Corp (CMHC) said six cities showed strong signs of problematic conditions, including Vancouver and Toronto. That was the same number as in October, though Victoria's risk level rose, while Calgary's declined.
"We continue to detect strong evidence of problematic conditions in Canada," CMHC chief economist Bob Dugan said in a statement.
"Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support," he added.
The Vancouver housing market has slowed since the foreign tax was introduced although economists are divided about how much was due to the tax. Ontario has played down the chances of implementing a similar tax but has not entirely ruled it out.
RBC said in its report that prices have continued to accelerate in Toronto particularly for single-family detached homes, which are in short supply.