Goldman Sachs Cuts Growth Outlook on China; Says Problems Go Beyond Cyclical (FXI)
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Goldman Sachs is getting a little bearish on China today, cutting growth expectations in arguably one of the fastest expanding economies in the world.
According to Goldman, China's economy has stabilized over the last few months, with the deceleration of construction-related activities as well as weakening global demand. The firm also commented, "We believe the deterioration in cyclical indicators and weakerthan-expected exports are headwinds that will keep the economy softer than expected in the next few quarters."
For 2012, growth in China is expected to expand 7.6 percent, from 7.9 percent prior. In 2013, Goldman cut growth expectations 5 points to 8.0 percent.
Goldman sees improved imvestment and exports supporting recovery next year.
Beyond cyclical factors, structural challenges remain an obstacle for China, including "the level of the economy’s potential growth during the economic transition, policy tools and constraints, and internal saving and investment structure."
Investrs will be keeping an eye on iShares FTSE/Xinhua China 25 Index (NYSE: FXI) Thursday following the comments.
According to Goldman, China's economy has stabilized over the last few months, with the deceleration of construction-related activities as well as weakening global demand. The firm also commented, "We believe the deterioration in cyclical indicators and weakerthan-expected exports are headwinds that will keep the economy softer than expected in the next few quarters."
For 2012, growth in China is expected to expand 7.6 percent, from 7.9 percent prior. In 2013, Goldman cut growth expectations 5 points to 8.0 percent.
Goldman sees improved imvestment and exports supporting recovery next year.
Beyond cyclical factors, structural challenges remain an obstacle for China, including "the level of the economy’s potential growth during the economic transition, policy tools and constraints, and internal saving and investment structure."
Investrs will be keeping an eye on iShares FTSE/Xinhua China 25 Index (NYSE: FXI) Thursday following the comments.
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