Goldman Sachs: China: Q2 Real GDP Growth Decelerated Significantly; June Activity Data Mixed
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Key Views
The economy exhibits a clear divergence: exports and manufacturing remain robust, while domestic demand and property stay weak. Services output growth of 4.7% continued to outpace retail sales, signaling persistent strength in services versus goods consumption. Youth unemployment fell to 15.6% in May but may rebound during the July-August graduation season, with weak domestic demand and AI adoption pressuring entry-level white-collar roles.
Outlook
Goldman Sachs mechanically lowered its 2026 real GDP growth forecast from 4.7% to 4.6% based on Q2 results, while maintaining quarterly sequential growth projections and its 2027 forecast of 4.7%. The firm expects the July Politburo meeting to reinforce dovish policy rhetoric and deploy remaining fiscal capacity to stabilize investment and growth. However, with exports resilient and the 4.5%-5.0% annual growth target still achievable, the probability of large-scale, broad stimulus is deemed low. Fixed asset investment data carries statistical revision risk.
Recommended Securities
No specific securities, ratings, or target prices were provided in this macroeconomic analysis report.
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