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Goldman Sachs lowers China growth estimates as Delta variant spreads

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Here we go again.

That’s the warning coming out of Goldman Sachs Group about China as the continued spread of the Delta variant threatens to slow the country’s economic growth yet again.

China has been locking down much of the country as the virus spreads and exports slow. But Goldman thinks the single-party nation will get the threat under control quickly, as it did in 2020.

“As of this writing, there are seven districts labeled high-risk and 191 districts labeled mid-risk. In the high-frequency data, the traffic congestion index based on 100 cities has begun to decline, which was not the case just a few days ago,” according to the report.

“Our forecasts assume the government brings the virus outbreak under control in about a month and the virus outbreak and related control measures mainly hit service activities. Industrial activities appeared less affected as of early August,” according to the memo.

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Goldman Sachs is warning another lockdown in China will slow growth.
LightRocket via Getty Images

Goldman economists slashed their growth estimates in the near term — cutting this quarter’s growth from 5.8 percent to 2.3 percent. But it predicted a rebound at the end of the year, saying fourth-quarter GDP growth will jump to 8.5 percent.

Overall, Goldman sees China’s lockdowns only slightly dampening growth over the entirety of 2021. It estimates GDP growth will drop to 8.3 percent this year from a previous estimate of 8.6 percent.

Still, the outbreaks have thrown China into crisis mode again. In recent days, the nation has sealed off an entire city to halt the spread of coronavirus and is gearing up to test all 11 million residents of Wuhan — the birthplace of the virus.



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