Economic Expectations for China Stagnate – Slightly Negative Outlook for 2020
China Economic PanelCEP Indicator Stands at Minus 8.7 Points
According to the most recent survey for January (13–22 January 2020), the expectations regarding the Chinese economy have remained almost unchanged. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently at minus 8.7 points, 0.2 points higher than in the previous month (December 2019: minus 8.9 points). Since April 2018, the CEP indicator has thus remained in the negative almost without interruption
The current situation of the Chinese economy is estimated to be 0.5 points lower than in December 2019, with the corresponding indicator falling to minus 13.1 points in January.
“Looking at the development of both the situation and expectation indicator, it becomes clear that the financial experts expect to see a further slight deterioration of the economic development in China over the next twelve months,” says Dr. Michael Schröder, senior researcher in the Research Department “International Finance and Financial Management” at ZEW Mannheim and project leader of the CEP survey.
According to the first calculations of the Chinese National Bureau of Statistics, the growth reduction forecast by the experts last year has materialized. On average, real gross domestic product (GDP) grew by 6.1 per cent in 2019. In the first quarter of 2019, the annualised growth rate still stood at 6.4 per cent, before declining to 6.2 per cent (Q2) and 6.0 per cent (Q3 and Q4) in the following quarters.
Expectation indicators for almost all sectors are in the negative range
According to the point forecasts of real GDP, growth of 5.9 per cent is expected for the current year and 5.8 per cent for 2021. “This marks the continuation of the slight downward trend in growth of recent years,” says Michael Schröder.
What is remarkable about the current survey is that the expectation indicators for almost all sectors are in the negative range, and even the outlook for the consumer-related sectors of the economy, which have so far been regarded as drivers of growth, has deteriorated considerably. A similar development can be observed with regard to the survey results for the most important Chinese economic regions.
“It seems that the continued efforts of the Chinese government to stimulate the economy through active economic policy measures are no longer considered very successful by the respondents,” summarizes Schröder.
