Moody's downgrades outlook for China to negative on structural issues, property sector woes
“The outlook change reflects increased risks in China related to structurally, persistently lower medium-term economic growth,” Moody’s said. The agency affirmed China's overall rating at 'A1'.
The agency expects China’s property sector to remain smaller in proportion to the entire economy than it was before the property correction which began in 2021.
Moody’s now expects China’s annual GDP growth to be at 4 per cent in 2024 and 2025 and at an average of 3.8 per cent between 2026 and 2030.
In an earlier report released on Monday, Moody's said China's growth is also set to slow amid muted spending by consumers and businesses, weak exports and an ongoing property crunch.
China stocks were trading in the red on Tuesday, amid consistent worries about the country's growth reflected in mixed economic data.
Goldman Sachs said that China and broader emerging Asia market stocks were among the most net sold regions by global hedge funds in November, as fund managers further reduced exposure to the world's second-largest economy.
The country's top officials are set to meet twice this month, with analysts expecting China to set aggressive growth goals for 2024.
The Communist Party’s 24-member Politburo is expected to gather soon to chart policy for next year.
“An ambitious growth target could help mitigate the risk of China falling into a self-fulfilling cycle of downbeat expectations, further depressing growth and reinforcing pessimistic expectations,” Goldman Sachs Group Inc. economists including Maggie Wei wrote in a Friday note.
(With agency inputs)
