Goldman Expects Choppy Growth Deceleration for China in 2015

It’s been a bumpy ride for China’s economy this year, with multiple growth scares followed by bouts of policy stimulus, and next year will be no different, says Goldman Sachs, telling investors to prepare for a moderate but “choppy growth deceleration.”

A housing market adjustment, decelerating credit growth and an advancement of difficult structural reforms in areas such as local government debt management and interest rate liberalization, will present continued headwinds for the world’s no. 2 economy in 2015.

“As the government tries to strike a balance between supporting growth and pushing forward reforms, we see a fair likelihood of a repeat of 2014’s stop-and-go pattern in economic momentum in the New Year,” Goldman economists wrote in a note Monday.

“Although we expect these reforms to proceed gradually, experiences from the anti-corruption campaign and the recent crackdown on shadow credit suggest that the impact of reforms could be highly uncertain, with the potential of posing significant downside to growth,” they added.

Gross domestic product (GDP) growth is set to moderate to 7 percent next year from an estimated 7.3 percent in 2014, the bank predicts.

Top policymakers are convening in Beijing this week for the country’s annual Central Economic Work Conference (CEWC), where economic priorities for the coming year will be discussed, including the GDP target.

Goldman expects the official growth target will be lowered to around 7 percent to facilitate the transition to a lower but more sustainable growth path.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza