Home Market News Fitch revises China’s outlook to negative due to economic growth concerns.

Fitch revises China’s outlook to negative due to economic growth concerns.

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Fitch altered China’s sovereign credit

Fitch lowered China’s sovereign credit rating outlook to negative due to fiscal risks amid economic uncertainties during its transition to new growth models. Fitch forecasted an increase in the general government deficit to 7.1% of GDP in 2024.

Fitch altered China‘s sovereign credit rating outlook to negative on Tuesday, attributing it to fiscal risks amid rising economic uncertainty during the transition to new growth models.

Company projected the general government deficit to increase to 7.1% of gross domestic product (GDP) in 2024 from 5.8% in 2023, marking the highest level since 2020 when strict COVID measures imposed by Beijing heavily impacted the world’s second-largest economy.

Fitch Prediction

Company predicted China’s economic growth to decelerate to 4.5% in 2024 from 5.2% in the previous year, differing from upward revisions by Citi and the International Monetary Fund to their China forecasts.

China’s January-February factory output and retail sales surpassed expectations, aligning with strong exports and consumer inflation figures, offering an initial momentum for Beijing’s ambitious 5.0% GDP growth target for 2024, as analysts noted.

Fitch
Image: DD News

What did the fitch say?

Company stated that the outlook revision mirrors growing risks to China’s public finance outlook as the nation grapples with heightened economic uncertainties during a shift away from property-driven growth towards a perceived more sustainable growth model.

What did the finance Minister Say?

China’s finance ministry expressed regret over Fitch’s ratings decision. Moody’s issued a downgrade warning on China’s credit rating in December, citing expenses related to bailing out local governments and state-owned firms, as well as managing its property crisis.

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