China Growth Forecast Too Optimistic

China's growth rate has slowed dramatically - and the forecasts for Chinese growth have always been overly optimistic. What should we expect from the Dragon Economy?

Robert Johnson, CFA 18 February, 2015 | 10:13AM
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Bob Johnson: This week's chart of the week features China's GDP growth forecast. We go back all the way to 2010 to IMF documents showing those forecasts, and each one's a five-year forecast. The very top line is a forecast for 2010 to 2015; the long bottom line is for 2014 to 2019. Then, there is also a brief segment on the graph showing the most recent update, which is only a two-year update.

Looking at the data, there are two things to take away from it. One is that China's growth rate has slowed and slowed dramatically. The second takeaway is that the forecasts for Chinese growth have always been overly optimistic and always tend to come down in the following year – hence, the lines each year get lower and lower.

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Robert Johnson, CFA  is director of economic analysis with Morningstar.