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.