Goldman slashes China growth forecast on Covid's delta variant uutbreak

Goldman Sachs Group Inc. downgraded its economic growth forecast for China as measures to contain the fast-expanding Covid-19 resurgence curb spending.

The economists cut their projection for quarter-on-quarter growth of gross domestic product in the third quarter and also lowered their full-year GDP growth forecast to 8.3% from 8.6%, according to a report released late Sunday. The prediction assumes the government will bring the outbreak under control in about a month, and follows the downgrade by Nomura Holdings Inc. earlier this month.

Economists led by Hui Shan cut their estimate for annualized growth in the current quarter to 2.3% from 5.8% previously, and raised their forecast for fourth-quarter GDP growth to 8.5% quarter-on-quarter from the previous 5.8%. They expect a rebound after the virus curbs are lifted as well as supportive monetary and fiscal policy in the coming months, including faster local government bond issuance and another cut in the reserve requirement ratio.

Export growth slowed in July, adding to concerns about downward pressure on the economy in the second half of the year. China’s GDP growth may slow to 6.3% and 5% year-on-year in the third and fourth quarter respectively on easing exports and property investment momentum, the official Financial News reported Monday, citing Zhu Baoliang, the chief economist of think-tank connected to the national economy planning agency.