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China GDP Forecast Cut by Barclay’s

In a research note Monday, China GDP forecasts were cut by Barclay’s.

In note to investors on Monday morning, China GDP forecasts were cut by Barclay’s citing a slowing economy and the new leadership’s tolerance for slower growth.

“We lower our China’s 2013 GDP growth forecasts to 7.4% (previous: 7.9%), given the new leaders’ level of tolerance for slower growth. While such a reading (and hence our belief of no large policy stimulus) has been behind our consistently below-consensus view on China’s economic growth since 2011, we now think Premier Li’s bottom line for growth is probably lowered to 7% from 7.5%.”

“His recent speeches highlighted the challenges for China to reach the 7% target in this decade and the need to accelerate structural reforms to unleash growth potential.  As reforms (such as interest rate liberalization) could lower growth in the near term before the benefits show up gradually, we also lower our 2014 growth forecast to 7.4% (previous: 8.1%)”

This downgrade comes after China reported weaker than expected growth on Saturday and confirms fears by world investors that the country’s growth is slowing down. This is worrisome for companies that count on China for a large portion of its revenues. Multinationals like Caterpillar (NYSE: CAT) is one that doesn’t see reports like this as a positive outlook for its international sales growth.

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