Goldman Sachs Cuts China's GDP Projections

Goldman Sachs cut its forecast for China's growth in the next 3 years amid widespread pessimism about the state of the country's second-largest economy in the world. Goldman Sachs on Monday cut its 2016 forecast down to 6.4% from 6.7% 2017 to 6.1% from 6.5%, and 2018 to 5.8% from 6.2%. The Chinese government is targeting growth of around 7% this year. More pessimistic assessment of the Goldman is the latest setback for China experiencing upheavals over the last few weeks. The move by the central bank to devalue the renminbi at the beginning of the month made investors anxious and undermine the stock market. See minimal impact from efforts to prop up the stock market, the Chinese government is now reportedly being pulled back their market intervention plan.

For 2015, Goldman Sachs maintain the 6.8% projection. This would mark a sharp slowdown from last year, when the economy grew by 7.4%. According to Goldman, the economy facing economic uncertainty dna current policy. This is seen in the stock market volatility and abrupt movement in fixing the yuan exchange rate in recent years, which adds to uncertainty about the path of currency exchange rate policy in the future, he added. Goldman said that according to his estimation will take several months for the impact this uncertainty crept into the economy, indicating the risk of a decline in activity data in August and possibly September.