(Bloomberg) -- Fitch Ratings lowered China’s economic growth projections for 2021 and 2022 as a slowdown in the property market weighs on domestic demand. 

Gross domestic product is forecast to expand 8.1% this year, down from a previous projection of 8.4%, while the forecast for 2022 was cut to 5.2% from 5.5%, the ratings company said in a statement Thursday, based on its global report released last week.

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The cooling in the property sector is the key driver behind the forecast downgrades, although pandemic-related restrictions imposed in July and August also weighed on China’s recovery, it said. 

Other highlights from the statement:

  • Residential investment directly accounts for about 10% of GDP and property activity has large spill-overs to other industries
  • The economic slowdown has already prompted a recalibration of macroeconomic policy settings, such as a call for acceleration in special bond issuance, but the moves will take some time to gain traction
  • While Fitch Ratings does not expect reductions in benchmark interest rates, the reserve requirement ratio is likely to be cut again later this year following a 50 basis-point reduction in July

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