Fitch Ratings Lowers Growth Forecasts for China

Forex - The sharp increase in the likelihood of U.S. tariffs has led Fitch Ratings analysts to lower their growth forecasts for China. Analysts predict that the Chinese economy will decline from 4.5% to 4.3% next year, and they have also revised their 2026 forecast from 4.3% to 4.0%. Fitch assumes that the effective tariff rate on U.S. imports from China will rise from approximately 10% to around 35%. While this will reduce external demand, it is expected that the impact on GDP will be mitigated by fiscal and monetary stimulus measures, as well as currency depreciation. For 2024, Fitch anticipates a rebound in growth in the fourth quarter with further increases in fiscal support, resulting in an overall growth rate of 4.8% for the year. However, they caution that a prolonged downturn in the real estate market continues to pose a risk to these forecasts.