Bank of America downgrades China’s economy growth forecast

Bank of America downgrades China’s economy growth forecast Bank of America (BofA) cut its China growth forecast on Sept. 23 in response to intensifying troubles at property giant Evergrande, a fresh COVID outbreak and a widespread regulatory squeeze
Finance
September 23, 2021 10:30
Bank of America downgrades China’s economy growth forecast

Bank of America (BofA) cut its China growth forecast on September 23 in response to intensifying troubles at property giant Evergrande, a fresh COVID outbreak and a widespread regulatory squeeze, Report informs referring to Reuters.

While BofA trimmed its real gross domestic product (GDP) growth forecast for China for this year to 8% from 8.3%, it reserved its biggest cut for 2022 to 5.3% from 6.2%. It also trimmed its 2023 outlook to 5.8% from 6%.

BofA’s cuts come as economic headwinds have been growing for China’s $14.5 trillion economy and reflect growing concern that Evergrande’s troubles could have a wide impact.

Evergrande has total liabilities of $305 billion with two bond payments due this week, which it is unlikely to fulfill. Its total liability burden stands at less than 2% of GDP, signaling Beijing is well placed to prevent a wider economic shock.

BofA said its base-case scenario of the ongoing problems at Evergrande is “there would be little spillover” effect on the property sector as a whole and financial markets if the government facilitates an orderly debt restructuring.

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