China's reopening positive for world economic growth: Fitch

ISTANBUL

China's reopening after ease in coronavirus measures is positive for economic growth in the rest of the world, but it will not be a transformative event for the global economy, according to Fitch Ratings.

"China’s zero Covid policy had not significantly restricted the global supply of manufactured goods, and stronger Chinese growth will be consumption-led, limiting the transmission to other major economies," the rating agency said Tuesday in a statement.

Fitch said a stronger-than-anticipated recovery in Chinese economy would benefit global growth, noting that China accounts for about a fifth of global GDP.

However, "the boost to the rest of the world will be more limited than in recent episodes of strong or rapidly accelerating Chinese growth. China’s 2023 recovery will primarily be driven by increased private consumption as households re-engage in activities that were hampered by health controls," it added.

While Fitch said it recently raised China's 2023 economic growth forecast to 5% from 4.1%; it, however, does not expect a strong rebound as in 2021 when Chinese economy expanded by 8.4% because "tighter global monetary policy will weigh on demand for Chinese exports.

"The agency said it does not anticipate "aggressive macro-policy easing in China."

It stressed that Chinese economy reopening would mostly benefit the economies that are more closely integrated with Chinese consumer markets via merchandise trade and tourism.