Fitch downgrades China’s credit rating outlook

The international rating agency Fitch has changed its outlook for China’s credit rating from “stable” to “negative”. The reason given is growing uncertainty in the economy.

IN message there is a significant budget deficit of the country and a growing public debt and problems of managing financial leverage throughout the economy. Fitch forecasts the country’s economic growth to slow from 5.2 percent in 2023 to 4.5 percent in 2024.

“Wide budget deficits and rising public debt in recent years have eroded fiscal reserves from a ratings perspective,” the agency said in a statement. Analysts predict that the government deficit will rise to 7.1 percent of GDP in 2024 from 5.2 percent in 2023. This will be the highest figure since 2022.

The Ministry of Finance of the People’s Republic of China expressed regret about the agency’s decision. In a press release from the department declaredthat Fitch’s assessment methodology “fails to effectively and insightfully capture the positive role of a country’s fiscal policy in promoting its economic growth.”

In December 2023, the international rating agency Moody’s lowered the forecast for China’s credit rating to negative. Both Fitch and Moody’s maintained their current ratings at above average, A1 and A+. In both cases this means low credit risks.