Slump in Expectations for Chinese Economy

The latest survey carried out in August (17 – 31/08/2016) indicates that expectations for the Chinese economy have worsened. The CEP Indicator, which reflects the expectations of international financial market experts regarding China's macroeconomic development over the coming twelve months, has fallen by 8.5 points to a current negative reading of minus 1.9 points. The CEP Indicator therefore currently lies significantly below the long-term average of 5.8 points, seen in the period from mid 2013 to August 2016.

Expectations for the annual growth rate of the Chinese gross domestic product (GDP) have also been revised downwards. Growth of 6.5 per cent is now expected for 2016 (previously: 6.6 per cent) and in 2017, experts now expect to see growth of 6.3 per cent (previously: 6.5 per cent).

There currently seems to be little worry of inflation in China. In comparison to the still very high rate of growth, inflation expectations for 2017 remain rather low at 2.2 per cent. Expectations are indeed lower than in the previous month. Together with decreasing expectations for the rate of change of the money supply M2, this might imply further falls in the expected rate of growth.

For further information please contact

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