LONDON (Reuters) – S&P Global warned China on Thursday that its credit rating or its outlook could be downgraded if the government tried to offset the economic impact of the coronavirus with a spending splurge.
S&P currently rates China at A+ with a stable outlook. “The more important threat to China’s sovereign credit standing may emerge if the government becomes eager to prop up growth with heavy stimulus measures,” it said in a new report.
“Such a development…could lead to a negative rating action.”
The firm has estimated that the coronavirus outbreak will lower Chinese real GDP growth in 2020 to 5.0%, from a previous forecast of 5.7%. It sees the negative impact as temporary and expects growth will rebound to 6.4% in 2021.
(This story was refiled to tweak headline)
(Reporting by Marc Jones; Editing by Tommy Reggiori Wilkes)