Goldman Sachs lowers forecast of mainland GDP growth to 6%

Dec. 12, 2008 (China Knowledge) - The U.S. investment bank Goldman Sachs said yesterday it has revised its forecast of China's GDP growth next year to 6% from the previous 7.5%, the most bearish prediction so far, due to the negative impact of the global financial turmoil and economic recession on the world's fastest-growing economy, the South China Morning Post reported on Thursday.

Goldman economists forecast the slowdown will be greater than that during the Asia financial crisis or the 2001 dotcom bust, adding the depth of slowdown would be, to a large extent, determined by exports, fixed-asset investment, especially in the real estate sector, and inventory decline.

Mainland reported on Wednesday that its exports edged down 2.2% from a year earlier to US$114.99 billion in November, the first drop in seven years, and imports tumbled 17.9%.

Policymakers in Beijing has unveiled a multibillion-dollar stimulus package after the country's economic growth rate fell to 9% in the third quarter of this year, down from 11.9% over the corresponding period of last year.

The stimulus package was expected to start functioning by the second quarter of next year and project full influence in 2010, Goldman economists said.