If you have read the news, you notice a few major forces and the theme is starting to attract more attraction. From the Russia-Ukraine conflict, global food and energy inflation, and some countries running into bad debt, even the US is now under testing for the second quarter for GDP negative flow, and most likely will expect a second quarter accumulated, which technically begins the recession.
China has a very strict and implemented the country’s zero-Covid policy, from the recent month, from one city to another, under the lockdowns which deteriorating financial health for the masses. If you follow the news, you will notice that for small and bad banks in some of the provinces, some deposit customers can not access their money. As some banks make use of 3rd party platforms and practice shadow banking. Where most of the fund is channeled into property and real estate and local government infrastructure projects, leading to a rapid debt, and making serious credit risks by the lender. As more and more public is in fear following various news and reports of financial distress at the banks. When banks start to make customers who deposit their money become no accessible, and no action has been taken at a fast speed, or the bank has been under government authority investigation, the spillover effects may cover all the banks regardless of size.
As massive amounts of money have been lent over to the property and developer market, and the crash of the current market, if the banks can not recover their debt, the impact can be imagined next. Property loans account for nearly 30% of outstanding loans with China’s financial institutions on average.
When COVID-19 pandemic and lockdowns, make the generic public is more needed to access to their money deposit into the bank, but it is not accessible, or the bank is under investigation and freezing in operation, the market fear will turn people to withdraw out all from the banks, and if this not proactive in resolve in the timely matter, the negative spillover effects will spread into even more sectors, from current property to banking. Beware, if it will be a global issue due to the domino effect. As one country will lead to another to have similar cases and concerns and spillover the rest.
While the world is also in the position to decline in the global market economy, due to various variable interplay, this will make the global economy outlook in the negative. For those who have the mega infrastructure projects and huge debt under financing, high inflation and accelerated rise in the energy and food cost, the left only the country has few options. Continuing to print and let your own currency enter into the market may not be the resolution, raise the interest rate and you are at risk for accelerated inflation. Recent US rise of interest, and immediate reflection into the crash of the high risk and high gain cryptocurrency market. If the country continues to let their own currency devaluation and attempt to boost exports, it needs to see whether it got the demand for it or not in the first place. Are you ready to cope with the next two and three years of market changes? Digital transformation is not the option, it is necessary to help transform the said enterprise, from leveraging the automation, cloud, and cost scale to make the digital transformed enterprise more ready to compete for the future to come.
E-SPIN Group in the enterprise ICT solution supply, consultancy, project management, training and maintenance for corporation and government agencies did business across the region and via the channel. Feel free to contact E-SPIN for your project requirement and inquiry.
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