Key Global Monthly Views: Delta Variant Poses Downside Risks To Growth

• Despite still-robust incoming data, Fitch Solutions believes that downside pressures are building, which pose risks to their full-year growth forecast of 8.5% for China. They see risks stemming from three key areas.
• First, the recent outbreaks in China have resulted in greater restrictions, and given the lower efficacy of the Chinese vaccines, China’s zero-tolerance approach could result in stricter lockdowns over the coming weeks, which could dampen consumption.
• Second, the recent crackdown by Beijing on tech, education and gaming companies have resulted in a sharp decline in stock markets, which will weigh on investor confidence.
• Third, questions around debt sustainability for certain Chinese companies have emerged given rising bond delinquencies, which have continued to rise and could also put downward pressure on investor sentiment.

(Source: Fitch Solutions)