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Economic Expectations for China Continue to Fall
China Economic Panel (CEP) by ZEW and Fudan University (Shanghai)
The point forecasts for real gross domestic product (GDP) growth remain at 6.1 per cent for 2019; for 2020, however, they fall to 5.8 per cent (previously: 5.9 per cent).
The assessment of the current economic situation has risen by 3.2 points, and now stands at minus 9.7 points. Around 45 per cent of survey participants rate the current situation as normal, 32.3 per cent as poor and 19.4 per cent as good.
The relatively pessimistic assessment of the development of the Chinese economy is also reflected in the forecasts for the most important industrial regions, with the expectation indicators for Guangzhou, Shenzhen, Tianjin and Chongqing having dropped to double-digit negative levels. The survey participants therefore expect the economic situation in these regions to deteriorate significantly over the next twelve months. “Surprisingly, despite the ongoing unrest, participants still assess the future economic development of Hong Kong as relatively positive with an indicator value of minus 3.9 points. Many experts expect a speedy recovery of the economy once the protests have ended,” says Dr. Michael Schröder, senior researcher in the Research Department “International Finance and Financial Management” at the ZEW – Leibniz Centre for European Economic Research and project leader of the CEP survey.
About a month ago, the Chinese yuan experienced a devaluation against the US dollar, which came as a surprise to many observers. As predicted by the experts, this devaluation has continued. It is also expected that the yuan will continue to depreciate from the current exchange rate level (around 7.09 CNY/USD). Over the next three months the exchange rate is expected to be 7.16 CNY/USD, in one year 7.26 CNY/USD. This is likely to ease China’s export burden, but could also contribute to a deepening of the trade conflict with the United States.
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