Fitch cuts China, India 2012 growth forecasts
28 Sep 2012
Fitch Ratings has cut its 2012 growth forecasts for China to 7.8 per cent from 8 per cent and for India to 6 per cent from 6.5 per cent.
Earlier on Monday, Standard & Poor's had lowered its 2012 GDP forecasts for China and India by half a per cent (See: S&P lowers 2012 China GDP forecasts to 7.5 %, India to 5.5 %)
"Both regional giants face a deteriorating global growth outlook with diminished willingness or capacity to respond with domestic policy loosening, compared with 2009," ratings agency Fitch said in its Global Economic Outlook.
Slower exports are weighing on China's growth, but Fitch views the slowdown as also reflecting the authorities' efforts to squeeze consumer and house-price inflation out of the system after the strong credit-led stimulus of 2009-2010.
Fitch expects slowing construction activity to knock about 0.8 percentage points (pp) off China's growth in 2012. The agency expects only marginal policy loosening unless the labour market deteriorates sharply.
The ratings agency does not expect a "hard landing" in China given the authorities' scope for fiscal and monetary policy flexibility if they choose to use it.