HomeTop Global NewsGoldman Cuts China GDP Forecast, Citing Lagging Economic Support

Goldman Cuts China GDP Forecast, Citing Lagging Economic Support

Goldman Sachs Group Inc. reduced its forecast for China’s GDP growth given the government’s delay in rolling out a stimulus package to support the country’s vulnerable economy in the face of a stuttering post-pandemic rebound.

The State Council—China’s cabinet—was largely expected to announce on Friday a new support package to prop up the country’s economy. Speculation was boosted by the central bank’s surprise decision to cut interest rates earlier in the week; a move that economists claimed signaled a loosening monetary policy.

Investors were left disappointed, however, as the address lacked any specific details on a stimulus plan. Instead, the State Council commented that the government is in the process of assessing new measures and that these would be adopted in a “timely manner” once agreed upon.

Responding to this development, Goldman Sachs lowered its forecast for China’s growth this year from 6% to 5.4%, explaining that any potential stimulus package is expected to be smaller than those in previous downturns. The investment banking company claimed that this is because of rising debt levels, a declining population, and President Xi’s calls for less property speculation.

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