Goldman Sachs and Nomura cut their estimates for China's GDP growth.
A little over a month after the National Bureau of Statistics of China published its report revealing that the country's economy only expanded by a meagre 0.4% in the second quarter, Goldman Sachs and Nomura have both lowered their estimates for China's growth.
According to reports, the American corporation reduced its prediction for China's growth from 3.3% to 3%. Nomura decreased their forecast from 3.3% to 2.8% in the meanwhile.
"Beijing will probably do more to stop the recession, but introducing a comprehensive stimulus package is of low possibility in a year of government change, while the requirement to keep Covid near zero makes traditional stimulus measures considerably less effective," said Nomura in a statement.
The Chinese government's assessment that the nation would fall short of its goal of 5.5% economic growth by year's end is another factor contributing to the downward revision in estimate.
Due to this, the Politburo members' most recent quarterly economic meeting did not include a discussion of the 5.5% GDP growth objective.
It is important to remember that in May of this year, the credit rating company Fitch Ratings lowered its prediction for China's GDP growth from 4.8% to 4.3%.
Why is China's growth story at a halt?
According to WION, Beijing is using harsh steps to uphold its "zero-Covid tolerance" policy, while other nations are opening their borders and businesses as a result of surviving a pandemic.
One of the main causes of China's slow economic recovery has been the strategy. As factories and offices were shut down for extended periods of time due to the Communist Party of China's (CCP) strict lockdown policies, manufacturing decreased for months.
The fact that mainland China is currently experiencing one of its worst heatwaves in recent memory hasn't helped the situation. The Yangtze River has dried up due to the extreme heat, and the electric infrastructure is struggling to keep up with rising power consumption needs.
China's economy has the world's quickest rate of expansion for a very long period. A worldwide epidemic that started in its soil, however, has managed to put a screaming brakes on its expansion.