Fitch cuts China’s 2023 GDP forecast by 80 bps to 4.8٪

[NG Missile Vessels]

Rating agency Fitch on Thursday lowered China's 2023 GDP growth forecast to 4.8 per cent from 5.6 per cent earlier. The agency attributed the cut to the fading effect of removal of Covid-19 restrictions.

The agency affirmed China's long-term foreign currency issuer default ratings at 'A+' with a stable outlook, supported by the country's strong external finances.

Earlier today, an official data showed that China's factory activity contracted for a fifth straight month in August, as pressure mounts on Beijing to offer more policy support to bolster its sluggish economy

The reading is the latest to indicate the nation's post-Covid recovery is running off the tracks owing to a decline in overseas demand as well as a drop-off in consumption at home.

In June, S&P Global had cut its forecast for economic growth in China this year, underscoring the uneven nature of the country's post-reopening recovery that is spurring more calls for further stimulus.

S&P said it expects China to log GDP growth of 5.2 per cent in 2023, down from an earlier estimate of 5.5 per cent. It was the first such cut by a global credit ratings agency in 2023 and followed lowered predictions by Goldman Sachs and other major investment banks.

"China's key downside growth risk is that its recovery loses more steam amid weak confidence among consumers and in the housing market," S&P had said in a statement.

The world's second-largest economy had slowed in recent months after coming back to life with the lifting of three years of restrictive zero-Covid policies. In May, property investment slumped further, industrial output and retail sales growth missed forecasts, and youth unemployment hit a record 20.8 per cent.

Forecasts for China GDP growth this year range between 4.4 per cent and 6.2 per cent.

S&P had also stated that likely measures to bolster the economy could include "easing housing purchasing restrictions and mortgage down-payment requirements, expanding credit and infrastructure financing and, perhaps, fiscal support for consumption."

Four major Western banks including UBS, Standard Chartered, Bank of America (BoA) and JPMorgan had also cut their 2023 GDP growth forecasts for China. They expect China's GDP growth to be between 5.2 per cent and 5.7 per cent this year, down from an earlier range of 5.7 per cent to 6.3 per cent.

The June data showed China's economy stumbled in May with industrial output and retail sales growth missing forecasts, adding to expectations that Beijing will need to do more to shore up a shaky post-pandemic recovery.

The government has set a modest GDP growth target of around 5 per cent for this year after badly missing its 2022 goal.

Fitch cuts China’s 2023 GDP forecast by 80 bps to 4.8%, affirms A+ rating

Rating agency Fitch on Thursday lowered China's 2023 GDP growth forecast to 4.8 per cent from 5.6 per cent earlier. The agency attributed the cut to the fading effect of removal of Covid-19 restrictions. The agency affirmed China's long-term foreign currency issuer default ratings at 'A+' with a...

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[NG Missile Vessels]

Morgan Stanley cuts China’s 2023 economic growth forecast to 4.7%

Morgan Stanley is the latest among some of the major brokerages to cut China’s economic growth forecast for this year, following a spate of disappointing data from the country and worries over its embattled property sector. The Wall Street bank now sees China’s gross domestic product (GDP) growing 4.7% this year, down from an earlier forecast of 5%, according to a note released on Wednesday. It has also lowered its 2024 GDP forecast to 4.2% from 4.5%.

Earlier this week, J.P.Morgan cut China’s 2023 GDP growth forecast to 4.8% from 5% earlier, while Barclays cut it to 4.5%. Beijing had set a growth target of around 5% for this year.

Morgan Stanley lowered forecasts to “factor in a steeper capex (capital expenditure) slowdown amid deleveraging in the property sector and by Local government financing vehicles (LGFVs), with knock-on effects on consumption,” economists led by Robin Xing said in the note. China’s property sector has been grappling with a liquidity crunch since late 2021, when China Evergrande Group collapsed and triggered a series of debt defaults.

Morgan Stanley lowered forecasts to “factor in a steeper capex (capital expenditure) slowdown amid deleveraging in the property sector and by Local government financing vehicles (LGFVs), with knock-on effects on consumption,” economists led by Robin Xing said in the note. China’s property sector has been grappling with a liquidity crunch since late 2021, when China Evergrande Group collapsed and triggered a series of debt defaults.

Contagion fears following the country’s largest private developer Country Garden’s ability to make debt payments have risen, with asset manager Zhongzhi Enterprise Group on Wednesday flagging it was facing a liquidity crisis and would conduct a debt restructuring. “Concerns about misallocation could make the initial policy response hesitant, exacerbating the debt/deflation loop,” Morgan Stanley said.

Data last week showed China’s consumer sector fell into deflation and factory-gate prices extended declines in July, mounting further pressure on Beijing to release more direct policy stimulus.

Morgan Stanley cuts China's 2023 economic growth forecast to 4.7%

Morgan Stanley is the latest among some of the major brokerages to cut China's economic growth forecast for this year, following a spate

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[GreatHanWarrior]

Rating agency Fitch on Thursday lowered China's 2023 GDP growth forecast to 4.8 per cent from 5.6 per cent earlier. The agency attributed the cut to the fading effect of removal of Covid-19 restrictions.

The agency affirmed China's long-term foreign currency issuer default ratings at 'A+' with a stable outlook, supported by the country's strong external finances.

Earlier today, an official data showed that China's factory activity contracted for a fifth straight month in August, as pressure mounts on Beijing to offer more policy support to bolster its sluggish economy

The reading is the latest to indicate the nation's post-Covid recovery is running off the tracks owing to a decline in overseas demand as well as a drop-off in consumption at home.

In June, S&P Global had cut its forecast for economic growth in China this year, underscoring the uneven nature of the country's post-reopening recovery that is spurring more calls for further stimulus.

S&P said it expects China to log GDP growth of 5.2 per cent in 2023, down from an earlier estimate of 5.5 per cent. It was the first such cut by a global credit ratings agency in 2023 and followed lowered predictions by Goldman Sachs and other major investment banks.

"China's key downside growth risk is that its recovery loses more steam amid weak confidence among consumers and in the housing market," S&P had said in a statement.

The world's second-largest economy had slowed in recent months after coming back to life with the lifting of three years of restrictive zero-Covid policies. In May, property investment slumped further, industrial output and retail sales growth missed forecasts, and youth unemployment hit a record 20.8 per cent.

Forecasts for China GDP growth this year range between 4.4 per cent and 6.2 per cent.

S&P had also stated that likely measures to bolster the economy could include "easing housing purchasing restrictions and mortgage down-payment requirements, expanding credit and infrastructure financing and, perhaps, fiscal support for consumption."

Four major Western banks including UBS, Standard Chartered, Bank of America (BoA) and JPMorgan had also cut their 2023 GDP growth forecasts for China. They expect China's GDP growth to be between 5.2 per cent and 5.7 per cent this year, down from an earlier range of 5.7 per cent to 6.3 per cent.

The June data showed China's economy stumbled in May with industrial output and retail sales growth missing forecasts, adding to expectations that Beijing will need to do more to shore up a shaky post-pandemic recovery.

The government has set a modest GDP growth target of around 5 per cent for this year after badly missing its 2022 goal.

Fitch cuts China’s 2023 GDP forecast by 80 bps to 4.8%, affirms A+ rating

Rating agency Fitch on Thursday lowered China's 2023 GDP growth forecast to 4.8 per cent from 5.6 per cent earlier. The agency attributed the cut to the fading effect of removal of Covid-19 restrictions. The agency affirmed China's long-term foreign currency issuer default ratings at 'A+' with a...

www.google.com

Where is India's high-growth cow dung GDP reflected?

 

[NG Missile Vessels]

Why is China's economy slowing down and could it get worse?

HONG KONG, Sept 1 (Reuters) - China's economic growth is slowing down as policymakers try to fix a property market downturn, with troubles at major developer Country Garden in focus. Concerns are mounting over whether the world's second-largest economy is coming closer to a crunch point:

WHAT IS CAUSING CHINA’S ECONOMIC SLOWDOWN?
Unlike consumers in the West, Chinese people were left largely to fend for themselves during the COVID-19 pandemic and the revenge spending spree that some economists expected after China re-opened never took place.

Moreover, demand for Chinese exports has been softening as key trading partners have been grappling with rising living costs.

And with 70% of Chinese household wealth tied up in real estate, a big slowdown in the sector is trickling through to other parts of the economy.

THERE HAVE BEEN MAJOR CONCERNS OVER CHINA'S ECONOMY BEFORE. IS THIS TIME DIFFERENT?
Alarm bells over the economy rang during the global financial crisis in 2008-09 and during a capital outflow scare in 2015. China revived confidence then with a shock boost to infrastructure investment and by encouraging property market speculation, among other measures.

But the infrastructure upgrades have created too much debt, and the property bubble has burst, posing risks to financial stability today.

Given China's debt-fuelled investment in infrastructure and property has peaked and exports are slowing in line with the global economy, China only has one other source of demand to tinker with: household consumption.

In that sense, this slowdown is different.

Whether China bounces back largely depends on whether it can convince households to spend more and save less, and whether they will do so to such an extent that consumer demand compensates for weaknesses elsewhere in the economy.

WHY IS LOW HOUSEHOLD SPENDING A PROBLEM?
Household consumption, as a percentage of gross domestic product (GDP), was among the lowest in the world even before COVID, with economists identifying it as a key structural imbalance in an economy relying too heavily on debt-fuelled investment.

Economists blame weak domestic demand for subdued investment appetite in the private sector and for China sliding into deflation in July. If it persists, deflation could exacerbate the economic slowdown and deepen debt problems.

The imbalance between consumption and investment is deeper than Japan's before it entered its "lost decade" of stagnation in the 1990s.

China's household spending as a proportion of GDP lags that of most other countries.

WILL CHINA’S ECONOMIC SLOWDOWN GET WORSE?
Weak data readings have prompted some economists to flag the risk that China may struggle to meet its economic growth target of about 5% for 2023 without more government spending.

About 5% is still a much higher growth rate than many other major economies will achieve, but for one that invests roughly 40% of its GDP every year - about twice as much as the United States - economists say it remains a disappointing figure.

There is also uncertainty about the government's appetite for large fiscal stimulus, given high levels of municipal debt.

China's debt was 3 times the GDP in 2022

Stress in the property market, which accounts for about a quarter of economic activity, raises further concern about the ability of policymakers to arrest the slide in growth.

Some economists warn that investors will have to get used to much lower growth. A minority of them even raise the prospect of Japan-like stagnation.

Property sector performance January to July
But other economists say many consumers and small businesses may already feel economic pain as deep as during a recession, given youth unemployment rates above 21% and deflationary pressures weighing on profit margins.

WILL INTEREST RATE CUTS HELP?
Major Chinese banks on Friday cut interest rates on a range of yuan deposits, to mitigate pressure on their profit margins and give themselves room to reduce lending costs for borrowers, including by lowering mortgage rates.

While policymakers hope lower rates would boost consumption, economists warn the deposit rate cuts accompanying them result in a transfer of funds from consumers who save to those that borrow. Transfers of resources from the government sector to households would make a more meaningful long-term impact.

Rate cuts may also create risks of yuan depreciation and capital outflows, which China will be keen to avoid.

China's central bank said on Friday it will cut the amount of foreign exchange that financial institutions must hold as reserves for the first time this year, to counter pressure on the yuan.

WHAT MORE CAN CHINA'S GOVERNMENT DO?
Economists want to see measures that would boost the household consumption share of the GDP.

Options include government-funded consumer vouchers, significant tax cuts, encouraging faster wage growth, building a social safety net with higher pensions, unemployment benefits and better, and more widely available, public services.

No such steps were flagged at a recent Communist Party leadership meeting, but economists are looking to a key party conference in December for more profound structural reforms.

Why is China's economy slowing down and could it get worse?

China's economic growth is slowing down as policymakers try to fix a property market downturn, with troubles at major developer Country Garden in focus. Concerns are mounting over whether the world's second-largest economy is coming closer to a crunch point:

www.reuters.com

 

[Indos]

Next year I think will be a good year to be a base year for another 5 years economic growth projection for any nation. So starting in 2025 March, IMF will likely be able to do more accurate economic projection for another 5 years (until 2030).

2024 will also be the year for election for countries such as Indonesia, Pakistan, USA and India

 

[Skull and Bones]

It will be revised down further, as the effect of deflation is yet to show up on spending habits and follow on economic activities. And that will follow up with a domino effect of bankruptcies.