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Ongoing stress in China’s real estate market will make it tough for the country to reach its economic growth target for 2024, says Fitch Ratings.

In a new report, the rating agency said it has cut its forecasts for China’s housing market. It’s now expecting new home sales to drop by between 5% and 10% this year, as demand remains weak.

Against this backdrop, Fitch is expecting GDP growth of 4.5%, which also represents a modest downgrade from its previous forecast, and would fall short of the government’s 5% target.

“We expect a decline in infrastructure spending in 12 regions with a relatively higher debt-servicing burden to add to economic growth risks stemming from persistent difficulties in the property sector and broader deflationary pressure,” Fitch said.

“Growth in onshore aggregate financing decelerated further in February, highlighting sluggish borrowing demand,” it said, adding that overall financing in the offshore market remains negative too.

In certain economically stronger regions of the country, investment activity is expected to pick up, which “could mitigate some downside risks to economic growth,” Fitch noted.