China's recovery uneven; S&P Global lowers APAC growth to 4.5% in 2023

01 Jul '23

2 min read

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Insights

As China struggles with an uneven post-lockdown recovery, Asia-Pacific's (APAC) net rating outlook bias has slightly improved to minus 2 per cent in May from minus 3 per cent in February, S&P Global has said.
It has lowered APAC growth marginally to 4.5 per cent in 2023 and 2024, and sees risk around access to financing in the region as high and unchanged.

China is struggling with an uneven post-lockdown recovery and the Asia-Pacific region's net rating outlook bias has slightly improved to minus 2 per cent in May this year from minus 3 per cent in February, according to S&P Global.

With interest rates and inflation set to stay high for longer in the region (except China), borrowers and customers are increasingly accustomed to higher financing costs and prices.

S&P Global foresees risk around access to financing in the region as high and unchanged. However, if such conditions persist, asset values and risk pricing may recalibrate. Financial markets could stay volatile for longer, it noted.

The agency assesses the risk of a hard landing for the global economy as high and unchanged. While weaker global demand will slow export and manufacturing activities, the resumption of social mobility and consumption across the Asia-Pacific region will offset the drag.

It has lowered Asia-Pacific's growth marginally to 4.5 per cent in 2023 and 2024.

China's recovery momentum post-COVID is ebbing, waylaid by weak business and household confidence. High youth unemployment and lingering property weakness further sour sentiment.

The introduction of policy stimulus in China could limit the slowdown in growth, S&P Global noted. Consequently, it sees the China recovery risk as high and improving. Meanwhile, terse ties with the United States could see global firms re-evaluating their expansion into China, it added.

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