Economists at international financial institutions have warned of slowing economic growth in China as the country’s power shortage worsens, forcing businesses to cut production.
Economists at Goldman Sachs Group have lowered their forecast for China’s economic growth this year, citing recent sharp cuts in production in various heavy-energy-consuming industries, as significant downside pressure on the outlook.
According to Goldman’s September 28 research note, significant industrial output cuts add “significant negative pressure” due to power outages.
It is estimated that 44 percent of China’s industrial activity has been affected.
The power supply crisis, due to environmental regulations, supply constraints and rising prices, left some factories and residential homes without electricity.
Goldman cut China’s forecast of economic growth for 2021 from 8.2 percent to 7.8 percent and for 2022 to 5.5 percent.
Nomura Holdings slashed China’s gross domestic product (GDP) growth forecast for 2021 to 7.7 percent from 8.2 percent.
Its chief China economist Lu Ting said in a September 24 note that, even with this cut, “we see further downside risks to our forecasts.”
In another note, Nomura said strict measures to curb electricity use in economic powerhouses such as Jiangsu, Zhejiang and Guangdong provinces could cause the Purchasing Managers Index (PMI) to fall below 50, indicating a contraction in the manufacturing economy. of last week.
Economists at Morgan Stanley have predicted that, if China’s production restrictions continue at the current pace for the rest of the year, GDP growth in the fourth quarter will be cut by about 1 percent.
This News Originally From – The Epoch Times