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Indebted Chinese developer Evergrande must pay interest on foreign bonds in the amount of $ 83.5 million (roughly 1.8 billion crowns) by Thursday. Otherwise, real estate companies would face bankruptcy. According to experts, this could also affect the Czech economy.
It is not yet clear whether the Chinese company Evergrande will pay interest. The developer is to pay another $ 47.5 million (approximately one billion crowns) next Wednesday. If the company does not pay its liabilities, it faces bankruptcy.
It is the collapse of this huge company that could really ruin the world economy. The Czechs could also feel problems. Economists agree that this is a very important case that should not be taken lightly.
“It is important to follow the case of a Chinese developer. It is a huge company. If it could not repay its liabilities, it would also affect, among other things, European institutions to which it owes money,” said economist David Marek to TN.cz.
Impact on the Czechia
Economists believe that the collapse of the real estate company Evergrande should not have such consequences for the world economy as the collapse of the American bank Lehman Brothers in 2008. Problems in China in particular are expected. It was there that the Chinese government called on the authorities to prepare for the possibility of the company’s bankruptcy. However, state officials want to ensure that the event does not shake the local economy too much.
However, if the situation worsened, the Czechs would also feel the impact. “I can imagine if they started to go bankrupt in China, it would affect the world construction market. It could mix with material prices,” said economist Pavel Peterka.
Imports and exports would also have problems. “It would hit us that it could temporarily slow down the growth of the Chinese economy. And because it is the second world economy interconnected with the Czech Republic, it could mean that Czech exports to China or imports from China could have temporary problems,” he explained. Marek.
“At a time when the Chinese financial sector would be damaged, other companies would get into trouble as well. Due to growing mistrust, no loans would be provided. This could block production, ie deliveries to Europe. The situation is serious,” added economist Štěpán Křeček. .
According to some experts, we would also feel the changes when traveling to other countries. “It would be a pressure that would go towards a weakening of the koruna in the Czech economy. This could make it more expensive for us abroad,” said economist Dominik Stroukal.
Like the crisis of 2008?
Many people compare the situation to the crisis in 2008, when the American investment bank Lehman Brothers fell. However, according to experts, bankruptcy came suddenly in this case. In contrast, the problems of the Chinese developer have been known for a long time.
“For now, it seems to be an isolated case. It should not threaten the economy like the collapse of the bank in 2008,” Peterka thinks.
“The volume is huge. But the Chinese economy is large and able to absorb a lot. It should not trigger dominoes. No one expects that a global recession should start,” Stroukal concluded.
The Czech economy has collapsed this year. Find out more in the following report:
TN.cz
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