BEIJING -- Morgan Stanley said Wednesday it has decided to trim its predictions for China's 2012 and 2013 GDP 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.

Urban fixed-asset investment increased 20.2 percent year-on-year to 21.8 trillion yuan ($3.4 trillion) 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 CPI forecasts at 2.9 percent for 2012 and 3.1 percent for 2013.