Moody’s has cut its forecast for China’s 2022 gross domestic product (GDP) growth from 5.2% to 4.5%, the rating agency said in a note on Monday.
According to the institution, imbalances due to Covid-19, a downturn in the real estate sector and high geopolitical risks will slow the growth of the Asian power.
For 2023, the agency expects growth of 5.3% of Chinese GDP.
“We expect a recovery in investment in fixed assets in the second half of the year, while the normalization of demand for goods and the devaluation of the currency should support the growth of exports. But consumption will only strengthen if coronavirus concerns and restrictions ease,” says Moody’s vice president and senior credit officer Lillian Li.
Even if there is monetary and fiscal support this year, it will be modest and its impact only gradual, while the uncertainty scenario will reduce the incentives for companies to invest and increase their debt, assesses Moody’s.
The agency also cites that it maintains its pessimistic forecast for China’s housing market.
“Higher risk aversion is likely to lead to tight funding conditions and weaker credit quality in the second half, particularly for weaker private sector companies, real estate developers and high-yield issuers,” he projects.
Source: CNN Brasil
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