Fitch recently revised its outlook on China’s sovereign credit rating to negative, citing risks to public finances as the country transitions to new growth models. The agency predicted that the general government deficit would rise to 7.1% of GDP in 2024, up from 5.8% in 2023, making it the highest deficit since 2020. Despite this negative outlook, Fitch maintained China’s IDR rating at “A+.”
The ratings agency also forecasted that China’s economic growth would slow to 4.5% in 2024 from 5.2% in the previous year. While Fitch’s forecast was more conservative than other entities like Citi and the IMF, who had revised their China forecasts upwards, there were still positive signs for China’s factory output and retail sales in January-February. These indicators were better than expected, alongside better-than-expected exports and consumer inflation indicators, providing an early indication of China’s potential to reach its 5.0% GDP growth target for 2024.
In response to Fitch’s ratings decision, China’s finance ministry expressed regret. This came after Moody’s issued a downgrade warning in December, citing concerns related to bailing out local governments and state firms and controlling the property crisis. Despite these challenges, it seems that China is determined to navigate its economic transition while maintaining a positive outlook on its future prospects as a global powerhouse.
+ There are no comments
Add yours