Rating agency Fitch lowered its forecast for China’s GDP growth in 2022, due to closures to contain the COVID-19 outbreak, which has paralyzed the economy.
The agency cut its growth estimate to 4.3% from 4.8%, according to a statement released Tuesday.
Chinese economic activity contracted sharply in April as restrictions were imposed to stem the spread of the virus, factories were closed, and transportation and supply chains were disrupted.
And while Fitch expects the unrest to subside this month, he indicated risks remain, including the possibility that Chinese restrictions will fail to quickly control the outbreak of infections or a possible delay in easing current restrictions. He said that China should strictly follow its strategy “zero COVID “until 2023.
Global banks like UBS, Barclays, Standard Chartered and Bank have downgraded of America, its full-year forecasts for Chinese economic growth in recent weeks, as the country maintains strict limits on the spread of the virus to try to stem its resurgence.
Economists surveyed by Bloomberg last month also lowered their forecast for China’s growth for 2022 again to 4.9%.
Fitch expects further political support in China in the coming quarters, including accelerating investment in infrastructure and further cuts in interest rates and the reserve requirement ratio.
“However, adjustments are likely to be modest against the backdrop of monetary tightening by other major central banks and the warning from Chinese authorities that increasing interest rate differentials could increase pressures on capital outflows,” he said. affirmed.
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