Goldman Sachs and Nomura Cut China’s GDP Outlook, Again


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Goldman Sachs lowers its 3.3% China projection for 2022 to 3%.

Nomura lowers its forecast for full-year growth from 3.3% to 2.8%.

Both include a lack of demand, concerns over China’s zero-COvid policy, problems with real estate, and a shortage of electricity.

Due to decreased demand, uncertainty surrounding the zero-Covid policy, and an energy shortage, Goldman Sachs and Nomura lowered their growth projections for China.

Nomura cut its full-year predictions to 2.8% from 3.3%, while Goldman Sachs cut its expectation for the entire year of 2022 to 3.0% from 3.3%.

Investment banks’ ongoing pessimism regarding Beijing’s 5.5% growth objective is reflected in the reduction. Chinese government representatives suggested in July that the nation might not meet its annual GDP target.

The most recent economic figures for July as well as short-term energy shortages brought on by an abnormally hot and dry summer were both mentioned by Goldman’s economists. One of the worst heat waves to hit China in recent memory is putting additional strain on an already fragile electricity grid and forcing some regions to reduce production.

Additionally, economists from both banks noticed a nationwide increase in Covid instances as well as a decline in property investment for July that reduced total investment.

Sudden rate Reductions

The predicted rate cuts follow the People’s Bank of China’s unexpected Monday interest rate cuts, which affected both its medium-term policy loans and a short-term liquidity instrument.

Beijing’s stimulus response may only be modest, according to Nomura and Goldman.

The true risk, according to Nomura, is that Beijing’s policy support may be “too little, too late, and too inefficient,” as opposed to some people’s worries about too much policy stimulus in H2.

The unexpected rate decreases, according to Goldman Sachs, do not necessarily herald the start of a more aggressive easing programme. Policymakers must also consider political limits in addition to economic ones.

Prior to the 20th Party Congress, “their current focus is expected to be on preventing further downward risks and preserving employment and social stability,” it stated.


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