China's Policy Stimulus Supports Near-Term Growth Prospects, Says Fitch Ratings

BEIJING, May 26 (Bernama) -- China's determination to defend the country's growth targets and the impact of stimulus measures already taken will support economic growth in 2016 and 2017, said Fitch Ratings. However, the rating agency has forecast growth to drop below six per cent in 2018, as the short-term boost from measures focused on increasing credit and investment fades. "We have raised China's real gross domestic product (GDP) growth forecast for 2016 and 2017 to 6.3 per cent in our May Global Economic Outlook, up by 0.1 and 0.3 percentage points respectively, from previously," it said in a statement here Thursday. Fitch said recent data pointed to a pick-up in house building and infrastructure investment, which ought to benefit Chinese industry on a broader basis. "Higher monetary growth targets at the March National People's Congress and official pronouncements show a policy focused on stabilising near-term growth at around the 6.5 per cent target. We think this focus will remain at least until the 19th Party Congress in November 2017," it said. However, Fitch said a more sustainable improvement in growth would require better productivity performance, and rising debt is likely to weigh on private investment. "We forecast growth to slow to 5.8 per cent in 2018, and it is difficult to reconcile official growth targets with significant economic rebalancing and an easing of systemic risks associated with rising leverage," it added. -- BERNAMA