Goldman Sachs Cuts its Forecasts Expecting Slower Global Growth

October 04 00:00 2011

New York, October 4 ( – Goldman Sachs (NYSE: GS) has cut its forecasts for the euro, sterling, US stock prices and bond yields and crude oil as it expects slower global growth leading to “mild recession in Germany and France and a deeper downturn” on the periphery of the euro zone.

The year-end forecast for the euro has been cut to $1.38 from a previous forecast of $1.40 and for sterling to $1.53 from $1.56 in a strategy note Monday by Jan Hatzius and Dominic Wilson. However, the European currencies at 0127 GMT Tuesday had rebounds with the euro at $1.3205 and the pound at $1.5450.

Goldman has cut its 2012 global economic growth forecast to 3.5 percent from 4.3 percent and is now tipping the chances of a U.S. recession at 40%. It now forecasts “a bit less dollar weakening” than its previous forecast and “a flatter upward trajectory for commodities.”

A weaker rebound for US equities for the rest of the year is also being visualized by Goldman now. It has cut its S&P forecast to 1,200 from 1,250 compared with Monday’s close of 1,099.23. It has forecast that the 10-year yield will rise to 2.25% from Monday’s close of 1.749% against a previous forecast of 2.75%.
Goldman visualizes a slower rebound for oil and has cut its year-end forecast for Brent crude to $112.50 a barrel from $120 against the current price of $100.70.