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Goldman Sachs Lowers China’s Economic Growth Forecast

Goldman Sachs analysts have revised down their projections for China’s economic growth, citing persistent weak confidence and uncertainties surrounding the property market as significant challenges.

Goldman Sachs

Goldman Sachs Cuts China’s Economic Growth Forecast

In a note published late on Sunday, the prominent U.S. investment bank lowered its forecast for China’s full-year real gross domestic product (GDP) growth, downgrading it from 6% to 5.4%. Furthermore, Goldman Sachs also adjusted its 2024 growth forecast, reducing it from 4.6% to 4.5%.

This downward revision aligns with similar actions taken by other global financial institutions, signaling a faltering post-pandemic recovery in China. However, despite the adjustment, Goldman Sachs remains among the more optimistic forecasters. The bank has recently joined others in revising its outlook for China’s currency as well.

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According to the analysts led by economist Hui Shan, the lackluster performance of China’s property market and its cascading effects serve as the primary reasons for the growth headwinds. They noted that the boost from the reopening of the economy faded swiftly in China compared to other countries.

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The analysts also expressed their belief that the growth challenges are likely to persist while policymakers face constraints imposed by economic and political considerations in providing substantial stimulus measures.

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China’s government has set a modest GDP growth target of approximately 5% for the current year, having significantly missed its 2022 goal. State media reported that the cabinet convened on Friday to discuss measures aimed at stimulating growth.

In recent days, China has marginally reduced several key interest rates, which is seen as a prelude to a potential cut in benchmark loan prime rates expected to be announced on Tuesday. These moves are part of the government’s efforts to support economic expansion.