As stress ripples through smaller banks in the United States., the tightening in lending standards among those institutions is expected to reduce economic growth this year, according to Goldman Sachs Research, which said lenders with less than $250 billion in assets account for about half of US commercial and industrial lending, 80 per cent of commercial real estate lending and 45 per cent of consumer lending.

Economists at the organisation lowered their forecast for US fourth-quarter gross domestic product (GDP) growth by 0.3 percentage point to 1.2 per cent year on year. The new estimate incorporates expectations for tighter lending and reflect in part a larger downgrade to investment spending, the organisation said in a note.

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