Goldman Sachs, Citigroup cut China’s 2024 growth forecast to 4.7%

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

Weak economic activity in August has ramped up attention on China’s slow economic recovery and highlighted the need for further stimulus measures to shore up demand.

The faltering growth has prompted global brokerages to scale back their 2024 projections to below government’s target of around 5%.

Goldman Sachs earlier expected full-year growth for the economy at 4.9%, while Citigroup had forecast growth at 4.8%.

China’s industrial output in August expanded 4.5% year-on-year, slowing from the 5.1% 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 gauge of consumption – rose 2.1% in August, decelerating from a 2.7% increase in July amid extreme weather and a summer travel peak. Analysts had expected retail sales, which have been anemic all year, to grow 2.5%.

“We believe the risk that China will miss the ‘around 5%’ full-year GDP growth target is on the rise, and thus the urgency for more demand-side easing measures is also increasing,” Goldman Sachs said in a note dated Sept. 15.

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

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

“We believe fiscal policy needs to step up to so as to break the austerity trap and timely deploy growth support,” economists at Citigroup said.