Page 11 - Policy Economic Report - February 2023

Policy and Economic Report:
Oil & Gas Market

• While the short-term outlook has brightened, important longer-term challenges remain. Many
Asian countries face elevated financial vulnerabilities, with high leverage across household and
corporate sectors, and significant bank exposure to real estate downturns. This suggests subtle
policy trade-offs between controlling inflation and ensuring financial stability, and a need to
strengthen resolution frameworks.

3. China Reopening Positive, Not Transformative for Global Growth Prospects- Fitch ratings
• According to Fitch Ratings, China’s reopening is positive for economic growth in the rest of the
world, but will not be a transformative event. 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.

• Fitch raised its China 2023 growth forecast to 5% from the 4.1% forecast in its December Global
Economic Outlook (GEO) to reflect evidence of the impact of the authorities’ shift from their
“dynamic zero Covid-19” policy stance.

• The stronger-than-anticipated Chinese recovery will benefit global growth. China accounts for
about a fifth of global GDP and, pre-pandemic, was contributing over a third of annual global
economic expansion. A 1pp increase in our forecast for China’s GDP growth would automatically

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