S&P lifts China growth forecasts for 2016, 2017 but holds 2018 number at 6%

SINGAPORE - S&P Global Ratings has raised China's annual growth forecasts for 2016 and 2017, following the country's stronger-than-expected GDP print for the second quarter of 2016. It now sees real GDP expanding at 6.6% this year and 6.3% next year, both about 0.25% higher than previous forecasts. The 2018 GDP growth forecast remains at 6.0%.

"Our higher growth forecasts don't mean that we think the health of the Chinese economy has improved. Instead, it shows we overestimated the authorities' appetite for slower GDP growth as the price for improving medium-term financial sustainability," said S&P Global Ratings Asia-Pacific Chief Economist, Paul Gruenwald.

“We still think that the current trajectory of the economy is unsustainable, given that credit growth has been running at about twice the pace of nominal GDP growth,” he said.

"While we gauge the risk of a near-term correction in China as relatively low, these risks will continue to rise over time if the credit-heavy pattern of GDP growth is not corrected.” www.standardandpoors.com (ATI).