Goldman Sachs lowered its fourth-quarter growth forecast by 20 basis points to 1.8%, citing a larger than-expected impact of recent trade war events.
"The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news," said Goldman Sachs chief U.S. economist Jan Hatzius in a note to clients Sunday.
President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.The U.S.-China trade war is going to have a larger impact on growth than Goldman Sachs originally estimated. "We have increased our estimate of the growth impact of the trade war," said Goldman Sachs chief U.S. economist Jan Hatzius in a note to clients Sunday. "The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news."
Financial conditions, policy uncertainty, business sentiment and supply chain distribution will all contribute to lower-than-expected growth as a result of the trade war, said Hatzius.
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