NEW YORK (Reuters) - Goldman Sachs lowered its global economic growth forecast for the year and raised its inflation expectations, saying the constraint from high oil prices was tighter than expected at the start of the year.
Goldman forecast in a note on Wednesday global real gross domestic product growth of 4.3 percent in 2011, down from its earlier forecast of 4.8 percent. The firm also lowered its 2012 forecast to 4.7 percent from 4.9 percent.
Goldman cut its growth forecasts for major regions including the United States, which it trimmed to 2.6 percent for this year from 3.1 percent.
Global inflation is now seen at 4.3 percent in 2011 from its previous forecast of 3.5 percent, and 2012 was nudged up to 3.2 percent from 3.1 percent. Goldman sees Brent crude at $140 a barrel by the end of 2012.
"Given that the changes in the oil price outlook have the flavor of a 'supply shock', the overall result is less growth and more inflation," Goldman said.
Even so, the firm does not expect a sustained slowdown in growth and said U.S. monetary policy should remain accommodative.
"This view is anchored in our expectation that the U.S. recovery will continue to deepen, that global growth will remain firm and that financial conditions, especially in the U.S. and major markets, will tighten only very gently," Goldman added.
The new forecasts follow comments by policymakers in the United States and elsewhere that high oil prices threaten to slow global growth.
Goldman said the effects of the Japanese earthquake and tsunami were also adding pressure, though mostly in Japan itself. GDP for Japan in 2011 was seen at minus-0.8 percent from 0.7 percent.
The recent spike in commodity prices has put central banks around the works in a tight spot as they try to ward off inflation while still promoting economic growth.
Goldman Sachs cut its year-end target for the S&P 500 to 1,450 from 1,500, citing margin concerns.
Goldman still expects the Fed to keep rates near zero through the end of next year.
Reporting by Leah Schnurr; Editing by Andrew Hay