Fitch Downgrades China's Growth Forecast from 4.8% to 4.3% Due to Lockdown Economic Impact

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Credit rating agency Fitch has downgraded its growth forecast for the Chinese economy this year to 4.3%, citing the impact of the zero-COVID policy.

According to Bloomberg News on the 3rd (local time), Fitch announced that it lowered its forecast for China's GDP growth rate this year from 4.8% to 4.3%. This reflects the sharp contraction in economic activity caused by restrictions to curb the spread of COVID-19, including factory shutdowns and movement limitations that disrupted supply chains.

Fitch expects the turmoil to ease this month but did not rule out the possibility that China’s COVID-19 outbreak may not be quickly controlled. It also predicted that China will maintain its strict zero-COVID policy through 2023.

According to economists surveyed by Bloomberg last month, China’s growth rate for 2022 was expected to reach 4.9%. This is significantly below China’s official target of 5.5% growth.

Fitch anticipates additional policy support in the third quarter of this year, including accelerated infrastructure investment and further cuts to policy interest rates and reserve requirement ratios.