Our Overheating Indicator Falls to 4.9

10:37 by Hubert Fromlet, Kalmar

Summary

  • Our so-called overheating indicator for China (right now rather a temperature indicator) fell in May 2012 to 4.9 from 5.9 in December 2011 (10=extremely overheated).
    Around 20 China experts from Asia, North America and Europe participated once again in the survey.
  • GDP forecasts by the China panel (average,%): 2012: 7.3, 2012 q4: 7.4, 2013: 8.3 %.
    The short-term outlook for 2012 is more modest than previously predicted – but still not too worrisome.
    The new forecast for 2013 is roughly unchanged compared to the last one.
  • 90 % of the panelists predict that the currency renminbi (RMB) in 2012 will be stable or appreciate by just 1-5 percent.
  • 82 % of the panelists think that there is still a dangerous price bubble on the real estate market (Dec 2011: 92 %).
  • The panel’s grading of confidence in the Chinese economy looks as follows:
    (5=very high confidence; 1=very low confidence)
    3 years from now: 3.5 5 years from now: 3.0 10 years from now: 2.8
  • The majority of LNU’s China panelists predicts that it will take up to 5-10 years to recognize a clearly visible shift to a more consumption-oriented growth model. It is not a short-term issue.

Read the full China Panel No 14, 2012 report

 

Hubert Fromlet
Professor of International Economics
Editorial board

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