Goldman Sachs analysts have revised down their growth forecasts for China’s economy due to ongoing concerns about weak confidence and the uncertainty surrounding the property market.
The U.S. investment bank recently announced a reduction in its projected real gross domestic product (GDP) growth for this year, adjusting it from 6% to 5.4%. Additionally, the bank lowered its 2024 growth forecast from 4.6% to 4.5%.
This downward revision aligns with similar actions taken by other global financial institutions, indicating a waning post-pandemic recovery in China.
However, Goldman Sachs remains relatively more optimistic compared to its counterparts. The bank has also adjusted its outlook for China’s currency in recent times.
The analysts at Goldman Sachs, led by economist Hui Shan, attributed the weakened growth prospects to the ongoing property downturn and its subsequent repercussions.
They stated that the fading effects of the reopening of the economy have been particularly swift in China. Furthermore, they noted that policymakers face limitations due to economic and political considerations, hindering their ability to implement substantial stimulus measures.
In response to these challenges, China’s government has set a modest GDP growth target of approximately 5% for this year, having fallen significantly short of its goal for 2022.
State media reported that the cabinet convened on Friday to discuss potential measures to bolster economic growth.
While Goldman Sachs’ downward revision reflects the persisting concerns surrounding China’s economic growth, it should be noted that the bank’s revised forecasts remain more positive compared to other institutions.
As China navigates through the challenges posed by the property market and ongoing uncertainties, policymakers are working within constraints to find a balance between economic revitalization and other considerations.
The effectiveness of the measures implemented by the Chinese government to stimulate growth will be closely watched by analysts and market observers in the coming months.