Shocking expectations for China … significant deflation and limited recovery after SK

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Source: BEIJING – Reuters

Goldman Sachs lowered its estimate of China’s gross domestic product in the first quarter to a 9% year-on-year contraction from a previous forecast of 2.5% growth, based on “remarkably weak” economic data in January and February.

Data released Monday showed that industrial production in China fell at the largest pace in three decades in the first two months of the year, after the epidemic of the emerging Corona Virus disrupted the footsteps of the world’s second largest economy.

Goldman wrote in a note on Tuesday that the rapid spread of the epidemic in other countries makes it expected to slow growth outside China also significantly in the second quarter and therefore any recovery in Chinese economic activities will likely be limited.

He added that he does not expect the GDP to return to its previous path before the disease spread until the third quarter, and also reduced its expectation for GDP growth for the whole year from 5.5% in the previous estimate to 3%.



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