Goldman Sachs and Citigroup cut China’s growth forecast for 2024 to 4.7% By Reuters

(Reuters) – Goldman Sachs and Citigroup cut their full-year forecasts for China’s economic growth to 4.7 percent after industrial output in the world’s second-largest economy slowed to a five-month low in August.

Weak economic activity in August heightened focus on China’s sluggish economic recovery and underscored the need for additional stimulus measures to support demand.

Weak growth prompted global brokerages to cut their forecasts for 2024 below the government’s target of around 5%.

Goldman Sachs had previously forecast full-year growth of 4.9 percent for the economy, while Citigroup had forecast growth of 4.8 percent.

China’s industrial output rose 4.5 percent year-on-year in August, slowing from a 5.1 percent pace in July and marking the slowest growth since March, data from the National Bureau of Statistics (NBS) showed on Saturday. .

Retail sales – a key indicator of consumption – rose 2.1% in August, down from a 2.7% rise in July, amid extreme weather and a peak in summer travel. Analysts had expected retail sales, which have been anemic all year, to rise 2.5%.

“We believe the risk of China missing its full-year GDP growth target of ‘around 5%’ is increasing, and therefore the urgency for more demand easing measures is increasing,” Goldman said Sachs in a note from September. 15.

It maintained the country’s GDP growth forecast for 2025 at 4.3%.

However, Citigroup on Sunday cut its end-2025 forecast for China’s GDP growth to 4.2 percent from 4.5 percent due to a lack of major catalysts for domestic demand.

“We believe that fiscal policy needs to be stepped up to break the austerity trap and implement timely support for growth,” Citigroup economists said.