Sunday 4 December 2022
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EconomyGoldman Sachs, Nomura downgrade China GDP forecasts

Goldman Sachs, Nomura downgrade China GDP forecasts

Goldman Sachs Group Inc and Nomura Holdings Inc have downgraded their forecasts for the economic growth of further, with a power supply crunch adding more uncertainty to the outlook. Goldman Sachs lowered its projection for gross domestic product growth to 3% from 3.3%, citing weaker-than-expected July economic data as well as near-term energy constraints. Nomura slashed its forecast to 2.8% from 3.3%.

The slowdown in deepened in July as a worsening property slump and Covid lockdowns continued to curb business and consumer activity. The central bank unexpectedly cut interest rates this week to help bolster growth, while local governments are set to sell more bonds to ramp up spending.

have turned more downbeat about the growth outlook this year, predicting for months already that the government will miss its ambitious GDP growth target of around 5.5%. The consensus in a Bloomberg survey of economists is 3.8%. Top officials have been downplaying the target recently, and have privately acknowledged that it’s unlikely to meet it this year.

Nomura said the Covid situation has worsened recently, and August activity data could be even worse than July due to the rising number of lockdowns. The current heatwave could also hit growth, it said.

“Beijing will likely do more to arrest the slowdown, but rolling out a comprehensive stimulus package is of low probability in a year of government reshuffle, while the need for maintaining Covid makes conventional stimulus measures much less effective,” Nomura including Lu Ting wrote in a note Thursday.

Several other have also cut their forecasts for this week. Analysts at ING Groep NV and TD Securities Inc downgraded their full-year GDP projections to 4% and 2.9%, respectively.

Goldman Sachs said the change in its forecast implied GDP for the third quarter would grow 3.5% from a year ago, lower than an earlier projection of 4.3% while fourth-quarter growth would ease to 3.3% from 3.8% previously.

Nomura see GDP expanding 2.9% from a year ago this quarter and 3.3% next quarter.

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