Moody's Raises US Growth Estimates For 2023, Lowers China's For FY24
Credit rating agency Moody's raised its 2023 U.S. economic growth forecast on Friday but cut its estimate next year for China, saying that while the risk of a recession had fallen in the United States, China's challenges were mounting.
"We have raised our growth forecast for the United States' economy to 1.9 per cent in 2023 from 1.1 per cent in our May outlook, acknowledging the strong underlying economic momentum," Moody's said in a report.
The firm, now the only big three agency to have a top-notch triple-A rating for the US following Fitch's downgrade last month, kept its 2024 growth forecast at 1 per cent, saying that high interest rates would act as a brake on the economy.
"We believe that it will be difficult for the Fed to achieve a sustained fall in inflation to its 2 per cent target if current economic conditions persist," Moody's said.
"A few quarters of below-trend growth is required, in our view, to prevent overheating."
In contrast, it said China was facing "considerable growth challenges" stemming from weak business and consumer confidence amid economic and policy uncertainty, continued property sector woes and an ageing working population.
Moody's kept its growth projection for this year at 5 per cent but cut its 2024 forecast to 4 per cent from 4.5 per cent previously. It rates China at A1 with a stable outlook, which is four notches below the US's top Aaa grade.
"Data from China suggest that the economic recovery from a prolonged zero-Covid policy remains muted, as the reopening momentum seen in March, April and May appears to be waning," Moody's said in its report.
"We believe that low consumer confidence is holding back household spending, and economic and policy uncertainty will continue to weigh on business decisions".
