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1 Sep 2015
China’s longer-term growth outlook slashed – Goldman Sachs
FXStreet (Mumbai) - In the wake of the most recent currency devaluation and market turmoil in China, economists from Goldman Sachs have lowered their growth forecasts for the country in the years to come.
The economic projections for the second world's largest economy have been slashed to 6.4%, 6.1% and 5.8% in 2016, 2017 and 2018. According to the previous forecast the Chinese economy was expected to grow 6.7%, 6.5% and 6.2% in the respective years. For the current year, the bank maintained its forecast of 6.8% growth.
The analysis is based on three factors – labor, capital and productivity.
Key Quotes:
"In China's case, each of these three components is expected to decelerate: labor due to demographics, capital deepening as the capital share of the economy comes down from exceptionally high levels, and total factor productivity growth as the economy narrows the gap with the richest economies,"
"The economy faces heightened economic and policy uncertainty at the present time,"
"This reflects extreme equity market volatility and more recently the sudden move in the CNY fixing, which has amplified uncertainty about the path of the exchange rate going forward."
The economic projections for the second world's largest economy have been slashed to 6.4%, 6.1% and 5.8% in 2016, 2017 and 2018. According to the previous forecast the Chinese economy was expected to grow 6.7%, 6.5% and 6.2% in the respective years. For the current year, the bank maintained its forecast of 6.8% growth.
The analysis is based on three factors – labor, capital and productivity.
Key Quotes:
"In China's case, each of these three components is expected to decelerate: labor due to demographics, capital deepening as the capital share of the economy comes down from exceptionally high levels, and total factor productivity growth as the economy narrows the gap with the richest economies,"
"The economy faces heightened economic and policy uncertainty at the present time,"
"This reflects extreme equity market volatility and more recently the sudden move in the CNY fixing, which has amplified uncertainty about the path of the exchange rate going forward."