Games boost sentiment, but no gold for economy

BEIJING (AFP) - While the 2008 Olympics will not have any major direct effect on economic growth in China, it will have an immense indirect impact, in terms of boosting overall sentiment, economists said.

The right to host the world's largest sports event has given many Chinese the feeling that everything is moving in the right direction, and they are spending accordingly in the stock and real estate markets.

"The psychological effect is very powerful. The Olympics are proof that the country has made it and is joining the ranks of the developed countries," said Andy Xie, an independent economist based in Shanghai.

"People are becoming very optimistic, so they are buying property, they are buying stocks. It's really supercharging the economy. Part of the overheating story comes from that," he said.

Public moods are notoriously tough to measure, but economists see clear reflections of the bullish sentiments in for instance the equity markets.