Citing “strikingly weak” economic data, Goldman Sachs cut its estimate of GDP growth for the first quarter of this year from 2.5% previously to 9% contraction.
Investment bank Goldman Sachs (USA) said on March 17 that China’s economy will likely shrink 9% in the first quarter of 2020, underscoring how the coronavirus has disrupted normal business activities in this country.
Goldman cut its estimate for China’s first-quarter gross domestic product growth to a 9% contraction, from a previous forecast of 2.5% growth, citing “strikingly weak” economic data in January and February that was reported on Monday. It also lowered its full-year GDP in 2020 forecast to 3% growth from an earlier estimate of 5.5%.
Goldman Sachs’ decision to cut its estimate was presented when the disease situation in China has eased with the number of infected people falling sharply compared to the first period. But it is worth noting that the trend of new cases is people who enter this country.
Mainland China had 21 new confirmed cases on March 16, the National Health Commission said, up from 16 cases on March 15. Of the 21 new cases, 20 involved infected travelers from abroad. This problem has led many local governments in China to tighten the monitoring of foreign travelers.
The Chinese foreign ministry on March 17 advised its citizens to avoid travel to high-risk countries.
With the numbers of new infections dwindling in China, The Chinese government is becoming more optimistic about economic prospects. State planning officials saying the world’s second-largest economy would return to normal in the second quarter as factories reopened, businesses resumed trading and consumers started spending again.
“Over 90% of large-scale industrial companies in regions outside of Hubei have resumed production, and resumption rates for places including Zhejiang, Jiangsu, and Shanghai are close to 100%, the number of railway loadings, civil aviation, ports, and water transportation were all operating normally,” spokeswoman of the China state planner said.