NUMBERS may bore many people, but not Michael McDonough. The chief global economist at Bloomberg is fascinated by what numbers can they tell us about ourselves and the world we live in, about where we are today and where we may be headed tomorrow.

“When I get access to a new data series, it feels like Christmas,” McDonough told Shanghai Daily during an exclusive interview last month in Bloomberg’s Shanghai office. “I have trouble sleeping at night because data always keep me thinking.”

For McDonough, data can be as frustrating as they are exciting, especially when they turn out to be at odds with his forecasts.

“I spend a lot of time reading material, from academic reports to releases from statistics bureaus,” he said. “If that takes 90 percent of time, then I spend the remaining 10 percent writing.”

He has the advantage of a wealth of information available on Bloomberg Professional Service terminals. He said that makes him the luckiest economist in the world.

Prior to joining Bloomberg four years ago, McDonough worked at Deutsche Bank covering Latin America and later joined the German bank’s US economics team. He also has been an independent consultant in Asia, advising hedge funds on a range of topics including global trading strategies.

In his work, McDonough calls himself a realist, adhering to the principle of “it is what it is.”

“I can follow the Chinese market while sitting in my New York office, and it makes me less emotional in analyzing situations,” McDonough said. “Also, I look for longer-term trends, not those things this month or this quarter.”

Q: How do you see China’s economic performance so far this year?

A: It is not too surprising what is happening in China right now. China is going through this rebalancing process. It is not going to be a smooth thing. You will have periods when growth slows and the road gets bumpy. During these periods, the focus will shift from implementing some of the outlined reforms to stabilizing growth. Right now, we are in the middle of these periods when growth is slowing a bit faster than the government would probably like, considering the 7.5 percent target. So you are seeing some new policies put in place to support growth.

Q: So what’s your outlook on China’s economic performance?

A: One positive aspect of the economy is the external sector. Through the combination of the pickup in exports and the implementation of policies to support growth, I think things will stabilize. You will probably see an upturn in the economy before the country carries out more reforms to rebalance. After that, things will slow down again. This is going to take place for quite a while. It is not going to be a six-month or one-year thing, I mean, it may happen in the next five to 10 years. It is all very healthy. Along the way, you will see the growth target lower. It may eventually go from 7.5 percent to 7 percent. Everything will be done gradually. The government wants to maintain stability. I think they are just doing that.

Q: Do you think China will launch a larger scale of stimulus?

A: No. A larger stimulus would take the government further away from rebalancing. When you implement mini stimulus, there are limited projects you can invest into, and they do add value to the economy. Back in 2008 when the government implemented the massive stimulus, a lot of money went into sectors that did not create value. Using mini stimulus is a smart way to stabilize growth. If you have a whole lot of investment, you can find it hard to focus on quality.

Q: How do you assess the possibility of a crash in China’s property sector?

A: Before it goes to that point, I think the government will implement measures to prevent that from happening. The same thing happened before 2008. The sector was heating up and the government put on a lot of restrictions. After the global financial crisis broke out, China began to lift some of these restrictions, and the housing sector started to do well again. So you may see that happen again. Also, when you look at the investment options in China, there are still not many choices. You can put your money in a savings account, which has a relatively low yield, or you can place it in equities, which have not been performing particularly well and take a lot of time and effort. Some of my friends’ grandparents, who were very active and excited about investing in equities a few years ago, have closed their accounts because they don’t have the time and the energy needed to do that. And returns have been sort of bad. Over the past few years, there has been a steady decline in the number of funded brokerage accounts in China. What is the third option? It is property, which has a high and stable yield. As long as there are only three main investment options and the government implements measures to stabilize the sector, you won’t see a crash in the real estate market.

Looking further out, one of the biggest risks that I see for the property sector is more investment options. If the capital account opens and suddenly you can invest money abroad, people may want to diversify the places where they put their money. With a lot of funds flowing out of housing at that point, you could see some downward pressure. But this possibility is way out in the future.

Q: How do you think China can bolster domestic demand?

A: It all boils down to one thing — income. Increased income. It is the solution to a lot of problems. Some of the planned reforms are aiming at this, such as empowering the private sector. Through raising the availability of capital for small and medium-sized enterprises, enhancing their ability to borrow and making the financial sector further sophisticated, you are going to see more companies like Alibaba in China. They employ a lot of people and help them get higher pay. In the US, since the global financial crisis, two-thirds of the new jobs are created by SMEs. You must support companies like Apple, which started in a garage and now is one of the best companies in the world.

Q: Do you think the developed world can extend its recovery?

A: The global economic recovery is going to be a bit rocky. The US and the Europe will have growth but not stellar growth. They will provide some stability for China’s external demand. I don’t think you will see 5 percent or 6 percent growth in the US. At this point, no one is worrying about the US going into a recession. The question is whether growth will be 2.5 percent or 3.5 percent.

Europe is less clear, and there are early signs of slower growth combined with deflation. But the European Central Bank has indicated that it is going to take some extraordinary steps to prevent that from happening, which helps to alleviate the deflationary concerns. There will be some bumps along the way in Europe, but they are on their way to a sustainable path.

Q: Do you think the yuan has reached a reasonable value?

A: The yuan is probably closer to fair value than it has been for a very long time. The question I always get asked is when the yuan will become fully convertible. That is a misconception. People think this will happen in a short period of time. The steps taken so far are quite positive, but they are small steps. The really big steps won’t come for a while. It is premature to have conversation on topics such as full convertibility of the yuan. All these domestic issues we are talking about, such as the opening of the financial market, need to be sorted before the yuan becomes freely floated. So what’s next? I guess maybe in the next couple of years, the government will allow a basket of currencies to decide the central parity rate, instead of setting it by itself. That is one of the feasible steps. People are talking about the yuan taking over the US dollar as a world reserve currency. I don’t think that is happening. That is way in the future.

Q: When data come out at variance with your forecasts, where do you find you go wrong in your thinking?

A: Economics isn’t a science that follows a fixed set of rules, like physics. For example, if you drop a glass cup on a stone floor, you know exactly what is going to happen, thanks to gravity. At any given time, economists can be tracking a million different variables to produce a forecast. Whether you decide to put you paycheck in your savings account or go out and buy something new will have an impact on the economy, so in China multiply that decision by 1.4 billion. For me the scariest thing isn’t being wrong; it is not being able to explain why. Babe Ruth, one of the most famous American baseball players, made it on base only about 47 percent of the time.

Q: How much do you change your method of analysis as experience proves you right or wrong?

A: Unquestionably, the longer you look at complex datasets, the better you understand their inner workings and start seeing patterns you didn’t originally notice.

Q: People make a lot of jokes about economists. Why do you think that is, and does it bother you?

A: My favorite is if you ask three economists a question, you will wind up with five answers. As I mentioned in the earlier response, with so many potential outcomes based on so many variables, economists can often be wrong or have conflicting views, which can make them the butt of many jokes. I think as long as it isn’t meant to be malicious, humor is great.