Goldman Sachs and Citigroup have revised down their full-year forecasts for China’s economic growth to 4.7% in response to a sluggish industrial output in August, which hit a five-month low.
The weaker economic performance in August has raised concerns about China’s gradual economic recovery and underscored the necessity for additional stimulus efforts to boost demand. As a result, global brokerages have adjusted their 2024 projections to below the government’s target of approximately 5%.
Initially, Goldman Sachs projected full-year economic growth at 4.9%, while Citigroup forecasted growth at 4.8%. China’s industrial output in August expanded by 4.5% year-on-year, a deceleration from July’s 5.1% pace and the slowest growth since March, according to data from the National Bureau of Statistics (NBS).
Retail sales, a pivotal indicator of consumption, increased by 2.1% in August, down from a 2.7% rise in July. Analysts had anticipated a 2.5% growth rate but were impacted by extreme weather conditions and a peak in summer travel.
Goldman Sachs maintained the country’s 2025 GDP growth forecast at 4.3% and emphasized the increasing risk of China missing the full-year GDP growth target of ‘around 5%’, prompting the necessity for additional demand-side measures.
Meanwhile, Citigroup reduced its 2025 year-end GDP growth estimate for China to 4.2% from 4.5%. The lack of significant drivers for domestic demand led to this adjustment, with the analyst advocating for an enhanced fiscal policy to stimulate growth and prevent stagnation.
