Playing catch-up? Goldman Sachs on Tuesday cut its 2011 growth forecast for China to 9.4 per cent, and 2012 to 9.2 per cent.
While likely to gain some attention – especially coming a day after disappointing PMI data – the downgrade looks to be a case of better late than never.
Goldman’s new forecast of 9.4 per cent in 2011 – down from 10 per cent previously – puts GS more or less in line with the World Bank, which last week upgraded its call on China GDP to 9.3 per cent from its earlier call of 9 per cent. The IMF has Chinese growth at 9.6 per cent. Here’s the Goldman logic:'Recent data have been worse than we expected. The growth slowdown has been even sharper than we forecast, especially evident in April industrial production (which mainly reflected tighter monetary and fiscal policy, although some specific industries have seen supply-side constraints). In addition, inflation is not coming down as rapidly as we hoped. We now cut our 2011 GDP growth forecast to 9.4% from 10.0%.'