Expectations for Chinese Economy Decline Further

Expectations for the Chinese economy have again worsened in the current survey period (12/09/2016 – 28/09/2016). The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has slightly fallen by 2.2 points to a current negative reading of minus 4.1 points. The CEP Indicator therefore currently lies significantly below the long-term average of 5.5 points for the second consecutive time, seen in the period from mid-2013 to September 2016.

In contrast to the decrease in the CEP Indicator, the forecasts for the annual rate of growth of the Chinese gross domestic product (GDP) have been revised upwards. A growth rate of 6.6 per cent is now expected for 2016 (previously: 6.5 per cent). In 2017, experts now expect to see a growth rate of 6.4 per cent (previously: 6.3 per cent). Thus, for the current survey, the reduction in the CEP Indicator does not transform in a reduction in point forecasts. This may be interpreted as a first sign of renewed growth in optimism regarding the Chinese economy.

The inflation forecasts for China reduced mere once again – as already seen during the months before – and are now at 1.7 per cent for the coming twelve months. Therefore, inflation forecasts in China become more similar to those for the United States and Germany and are reflected in the lower interest rate forecasts. For example, the SHIBOR should decrease to 1.7 per cent one year ahead. Also the savings and the loan rates are expected to decrease over the next twelve months. The forecast for the savings rate one year ahead is 1.2 per cent and for the loan rate 3.6 per cent.

For further information please contact

Dr. Michael Schröder, Phone +49(0)621 1235-368, E-mail schroeder@zew.de