- Goldman Sachs has revised its forecast for Chinese economic growth from 3.3% to 3% for this year.
- Data from July showed a worsening housing crisis combined with continued Covid restrictions.
- Slower economic growth for the global powerhouse would mean further easing in oil prices.
Goldman Sachs has revised its forecast for Chinese economic growth from 3.3% to 3% for this year. The bank attributed the revision to weaker-than-expected data for July and a tight energy supply.
Bloomberg noted in a news report that data from July showed a worsening housing crisis combined with continued Covid restrictions, topped by a recent unexpected decision by the country’s central bank to cut interest rates. ‘interest.
Slower economic growth for the global powerhouse would mean slower oil prices, which would be very welcome by other big consumers who have been trying for months to bring prices down with limited success.
Indeed, Brent Crude and WTI have been trading below $100 for more than a week now, amid thickening clouds over global economic growth. There were a number of reasons for this, but economic data suggesting a slowdown in China was among the most significant.
China also reported weaker refining cycles and imports for July, although it continued to build up its oil inventories.
Goldman isn’t alone in being increasingly pessimistic about China’s growth prospects, either. According to the Bloomberg report, Nomura also revised its forecast for the country’s GDP, much more substantially than Goldman, reducing it from 3.3% to 2.8%.
“Beijing will likely do more to halt the downturn, but rolling out a full stimulus package is unlikely in a year of government reshuffle, while the need to maintain zero Covid makes conventional stimulus much less effective,” they said. wrote the bank’s economists in a note.
Dutch ING Groep and Canada’s TD Securities have also downgraded their economic outlook for China in recent days, signaling that pessimism is spreading in the analyst community as China continues to struggle with Covid surges. following its zero-Covid policy and a slowdown in housing with developers. non-payment of bonds and difficulty in completing paid apartments.
By Charles Kennedy for Oilprice.com
More reading on Oilprice.com:
Download the free Oilprice app today
Back to the homepage