Reuters with a piece on Fitch comments re Chinese GDP forecasts in their Global Economic Outlook
Fitch's base case forecasts China's economy to expand by 6.8% and 6.3% in 2015 and 2016 respectively
But, Fitch outline an alternative, 'hard landing' scenario in China:
- China's economic growth falls below 3% in 2016
- Driven by a collapse in public and private investment
- Our assumptions in the shock scenario included a contraction in public investment of 4% in 2016 and deceleration in consumption growth to 5.6% in 2017 from 8.3% in 2014
- This would result in asset-quality deterioration with a spike in the banking system NPL ratio to 8%, a cumulative 10% depreciation in CNY/USD, a double-digit percentage decrease in foreign direct investment and a peak to trough fall in home prices of over 4%
- The resulting decline in trade combined with the regional investment exposures to China would weigh most on the export-centred economies of Hong Kong and Korea, with the cumulative reduction in GDP from the 2017 baseline amounting to 4.5pp and 4.3pp respectively. Japan would enter a deep recession, with the economy contracting in both 2016 and 2017 and its GDP down by 3.6pp by 2017 versus our base case estimates.
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Fitch playing 'what if'. Food for thought if you're that way inclined.