Goldman Sachs cuts China GDP growth forecasts citing tariff impact

US investment bank Goldman Sachs lowered its forecasts for China's GDP growth to 4 per cent in 2025 and 3.5 per cent in 2026 in a report published on Thursday, from 4.5 per cent and 4.0 per cent previously, citing the effects of tariffs. 

Goldman Sachs made the revision for the world's No. 2 economy and second biggest provider of US imports after US

President Donald Trump hiked the tariff on Chinese imports to 125 per cent from the 104 per cent level that kicked in on Wednesday. 

Although additional tariff increases are likely to have a "diminishing marginal impact", the substantial rise in US tariffs on China is expected to significantly weigh on the Chinese economy and labor market, Goldman said. 

 

"We anticipate the Chinese government will further intensify policy easing, projecting 60bp of policy rate cuts (vs. 40bp previously)." 

However, the report added that "even these significant easing measures are unlikely to fully offset the negative effects of the tariffs. 

Fitch, on April 3, cut China's long-term foreign currency rating by one notch to "A" from "A+", one year after it downgraded its outlook on China's credit rating.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)