ZEW: Economic Optimism Dampened Significantly – Outlook Stable in the Long Term

Date

23 May 2017

Sections

Development Policy
Innovation & Enterprise
Trade & Society

Press release

According to the current survey for May (2–17 May 2017), the economic
outlook for China has declined significantly, falling by 17.8 points (April
2017: 17.7 points). The rather optimistic sentiment witnessed in the
previous survey has thus faded somewhat. 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 0.1 points, falling below the long-term average of 5.2
points. The assessment of the current economic situation has also dampened
and fell by 5.4 points to a current level of 12.2 points.

What is remarkable, however, is that the point forecasts show a slight
improvement. For instance, the forecasts for the third quarter of 2017
increased from 6.6 per cent to 6.7 per cent. The overall forecast for 2017
also improved, climbing from 6.6 to 6.7 per cent.

How can these different survey results be explained given that they seem
contradictory at first glance? "The sentiment indicators are probably more
susceptible to recent or forthcoming events," explains Dr. Michael
Schröder, senior researcher in ZEW's Research Department "International
Finance and Financial Management" and project leader of the CEP survey. The
economic sentiment dampened somewhat possibly due to the decline in the
annual rate of change in industrial production, which fell from 7.6 per
cent in March to 6.5 per cent in April. Alongside a quarterly growth rate
of the real GDP of 1.3 per cent in the first quarter of 2017 – which is
rather weak, at least in Chinese terms – the indicators points towards a
rather restrained start to the year. In accordance with China's current
five-year plan, however, financial market experts still expect to see
strong growth throughout the year.

For more information please contact:
Dr. Michael Schröder, Phone +49(0)621/1235-368, E-mail schroeder@zew.de

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