The forecast for China's economic growth in 2023 has been revised by Reuters -- Rating agency Fitch, down from 4.1% previously, as consumption and broader activity are recovering faster than anticipated after the end of the zero-COVID regime.
Fitch said the recovery will be primarily based on consumption, noting that many high-frequency indicators have recently rebounded but still remain below pre-pandemic levels.
The economic rebound this year will be less vigorous than that in 2021, when the economy posted GDP growth of 8.4%, despite the forecast upgrade.
Fitch was the first major rating agency to upgrade China's 2023 economic growth forecast. In November of this year, S&P Global predicted that the economy would be on track for 4.8% GDP growth in 2023, in line with its November baseline, while Moody's forecast for growth in November was 4.0%.
This reflects a weakness in the property in part.
Fitch said in a statement that the market showed little evidence of an improvement in sales or housing starts in late 2022, despite a build-up of incremental policy support.
In addition to that, net trade may be a drag on economic growth in the year 2023, according to Fitch, with export demand being depressed due to economic slowdowns in the United States and Europe.
The direction of fiscal policy would be uncertain ahead of a March Parliament meeting, Fitch said.
Premier Li Keqiang pledged last week that the government will work to expand the economic recovery momentum despite the difficulties and challenges.
Fitch does not believe in aggressive macro-policy easing, and is expecting a deficit of around 7% of GDP in 2023, down from an estimated 8% in 2022.
Policymakers plan to step up support for domestic demand this year, but are likely to stop short of splashing out big on direct consumer subsidies, keeping their focus on investment, Reuters previously reported.