By Lee J. Miller
Aug. 11 (Bloomberg) -- China's economy will be slowed instead of stimulated the next two months by the Beijing Olympic Games and Paralympics, according to Goldman Sachs Group Inc.
Restrictions on construction, factories, cars and mining to cut pollution and traffic will be a ``short-term'' drag on economic output, Goldman said in a report. Most limits are imposed in Beijing and five nearby provinces and cities, which generate about 26 percent of China's economic output, Hong Kong- based analysts Yu Song and Hong Liang wrote in the Aug. 8 report.
``These measures will likely lead to a visible slowdown in real economic activities, both production and consumption, in August and September,'' the Goldman report said. Though activity will pick up in October, ``we expect a gradually softening economic path in the second half of 2008,'' the analysts wrote.
The CHART OF THE DAY compares gross domestic product growth among the so-called BRIC nations, Brazil, Russia, India and China, since July 2001, when Beijing was selected to host the games. China has had the highest year-on-year expansion since the fourth quarter of 2003, when India grew 11.3 percent on a record harvest and the lowest interest rates in three decades.
About 500,000 foreign visitors will attend the Olympics, with almost all 7 million tickets to the events sold, according to the Beijing statistical bureau and games organizing committee.
The Olympics run through Aug. 24 and the Paralympics follow from Sept. 6 to Sept. 17.
``While the long-term economic impacts of the Olympic Games are likely to be minimal, it increasingly looks like the games' short-term economic impacts are likely to be negative,'' the Goldman report said.
The city has spent about $70 billion to improve air quality, build subways, sports stadiums and an airport terminal to prepare for China's debut as an Olympics host.
To contact the reporter on this story: Lee J. Miller in Bangkok at lmiller@bloomberg.net
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