Morgan Stanley said Wednesday it has decided to trim its predictions for China's 2012 and 2013 gross domestic product to 7.5 percent and 7.9 percent, respectively, as weaker-than-expected economic data has deflated hopes for recovery.
The adjustments are down from the firm's previous forecasts of 8 percent and 8.6 percent for 2012 and 2013, respectively.
Data released over the weekend suggested that China's industrial production and investment have continued to falter.
Industrial value-added output expanded 8.9 percent year on year in August, down from 9.2 percent in July and and the slowest rate since May 2009, according to figures from the National Bureau of Statistics (NBS).
Urban fixed-asset investment increased 20.2 percent year on year to 21.8 trillion yuan (3.4 trillion U.S. dollars) in the January-August period, 0.2 percentage points slower than the growth for the January-July period.
"The August data suggested that our expectation of a growth rebound in the third quarter has become less likely to materialize," the firm said in a report, adding that it expects a modest growth rebound early next year.
Meanwhile, the firm said it will remove its forecast for another interest rate cut before the year's end in light of a possible rebound in property and food prices.
Inflation in August slightly rebounded to 2 percent due to higher food prices.
Morgan Stanley said it will maintain consumer price index (CPI) forecasts at 2.9 percent for 2012 and 3.1 percent for 2013.
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