Goldman Sachs became the latest bank to cut their forecasts for China’s economy, citing limited options to boost stimulus, reports Bloomberg. Analysts at Goldman lowered their estimates for China’s gross domestic product growth this year to 5.4% from 6% previously, according to a report dated Sunday. Any upcoming policy easing is unlikely to exceed those implemented in previous downturns including 2020, economists including Hui Shan said in the report.
Property and infrastructure stimulus will probably be “targeted and moderate” given the shrinking population, elevated debt levels and leader Xi Jinping’s call for curbing property speculation, they wrote. “Going down the same old route of using property and infrastructure to engineer a strong economic rebound would be inconsistent with the type of ‘high-quality growth’ that the leadership has been emphasizing repeatedly,” the report said.
Expectations for more policy support including government spending to pay for infrastructure and also property easing measures were rising last week, with some analysts floating the possibility that central government may issue special-purpose bonds to fund projects. May data released last week showed the recovery was weakening and the central bank cut key policy interest rates to lower borrowing costs and boost sentiment.