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Expectations for Chinese Economy Improve Slightly, Economic Outlook Remains Subdued
China Economic Panel (CEP) by ZEW and Fudan University (Shanghai)
Some of the point forecasts for real gross domestic product (GDP) growth have seen significant downward adjustments. For the third and fourth quarter of 2019, the survey participants expect annual growth rates of 6.0 per cent, respectively. In the previous month, the predicted growth rates were 6.3 per cent (Q3) and 6.2 per cent (Q4).
For the whole of 2019, the experts forecast a growth rate of 6.1 per cent (last month’s forecast: 6.2 per cent) The forecasts for GDP growth are therefore moving towards the lower end of the politically desired target range of 6.0 to 6.5 per cent. The GDP forecasts for 2020 fell by 0.1 percentage points compared to the previous month, and now stand at a current reading of 5.9 per cent.
What is particularly worrying about the results of this current survey is that the negative sentiment seems to have an impact on the economic drivers – private consumption and private investment – which have been relatively stable in the past. The expectations for these two drivers are experiencing a significant decline,” 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.
What is more, the indicators for the retail trade and services sector have recorded a significant decrease of more than 20 points, respectively. Both indicators are now clearly in negative territory (retail trade: minus 18.2 per cent; services: minus 13.7 per cent. “The negative effects on Chinese exports stemming from the trade war between the USA and China now also seem to have an impact on the domestic economy,” concludes Schröder.
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