Goldman Sachs seems to have injected a dose of optimism into China's economic outlook. The bank now expects the Chinese GDP to grow by 4.9% this year, up by 0.2% from their previous forecast. Analysts also suppose that next year, the growth will also pick up, reaching 4.7% instead of the earlier anticipated 4.3%. This information comes from Bloomberg, citing analysts at Goldman Sachs.
This upbeat outlook could be explained by the recent economic stimulus measures, showing that China’s authorities have shifted focus toward boosting the real economy, not just shuffling numbers around. Economists happily point out that the government is finally throwing its full weight behind growth support.
So, what prompted this sudden forecast upgrade? It turns out that Beijing has been busy considering economic stimulus measures since late September. The economy, which has been lagging due to weak sentiment and deflationary pressures, needed a bit of a push. Not so long ago, the Ministry of Finance promised to provide the economy with some budget. While consumer spending has not been touched yet, which analysts see as key to fighting deflation, it seems that China is keeping some aces up its sleeve.
Rumor has it that local government funds will unleash 2.3 trillion yuan (around 325 billion dollars) in the fourth quarter. These funds will be used for various projects, which Goldman Sachs says will accelerate the economy a bit more than previously expected.
Additionally, the National Development and Reform Commission announced last week that it planned to approve investment projects worth 200 billion yuan by the end of the month. All of this is part of the effort to push GDP closer to the elusive 5% target.
However, Goldman Sachs warns that it is not all smooth sailing. These measures will help boost growth by 0.4% next year, partly offsetting a 1.9% drop due to slow exports and the real estate crisis. However, China’s structural problems remain unsolved. That is why Goldman Sachs has wisely left its 2026 forecasts unchanged.
