Ratings Agency Cuts China Growth Forecast On Property Woes
Muhammad Irfan 28 days ago Thu 23rd September 2021 | 10:00 AM
Beijing, Sept 23 (UrduPoint / Pakistan Point News - 23rd Sep, 2021 ) :Ratings agency Fitch on Thursday cut its growth forecast for China's economy this year citing a slowdown in the country's colossal property sector, which is also facing headwinds over faltering real estate giant Evergrande.
China enjoyed a swift economic rebound from the Covid-19 pandemic, but strict new rules on the country's developers have caused a deleveraging rush and helped push housing giant Evergrande to crisis point.
Fitch Ratings said it expected growth to come in at 8.1 percent this year, compared with a previous 8.4 percent estimate, saying the "main factor weighing on the outlook is the slowdown in the property sector".
Beijing has cracked down on developers in a bid to force them to offload debt, introducing its "three red lines" to curb leverage last year.
"Housing starts are falling and financial pressures are weighing on real-estate investment," Fitch said in its latest report.
"Residential investment directly accounts for around 10 percent of GDP and property activity has large spill-overs to other industries," it added.
The property slowdown is also expected to hit emerging markets, taking a toll on global commodity demand.
A State Council meeting he chaired underlined measures to promote consumption, stabilise commodity prices and maintain growth of foreign investment and trade.
Anxious investors were keeping tabs on whether Evergrande makes a payment on an offshore bond due Thursday.
However, hopes that it could avert a disorderly debt resolution were boosted Wednesday when it announced it had reached a deal to repay interest on a separate, domestic bond that was also due Thursday.
Still, even it it does not stump up the cash to overseas bondholders, it has a 30-day grace period to find it.