China’s enormous, complex economic transition will keep emerging markets under pressure for the next five years, Goldman Sachs has warned.
In report setting out its forecasts on China, the bank told clients to “adjust their exposures” to EM assets.
“The country is trying to shift its economy away from an export-driven and investment-led one to a more balanced, consumption-oriented economy,” Goldman said in the report, headlined “Walled In: China’s Great Dilemma.”
“A complex and interconnected reform agenda has never been achieved on this scale. The transition, if accomplished, is unlikely to be smooth.”
That means China will spur market volatility not just this year, but for the next five years, with emerging markets likely to bear the brunt of the hit, Goldman said.