The global economy continued its upward trend in 2005, but was unable to grow as fast as in the previous year. Growth in all regions of the world was solid to strong – apart from in the euro zone. Overall, global economic output increased by 4.25%. World trade rose by an impressive 7%.
|Growth indicators for 2005|
|1)||Estimated, as of February 15, 2006.|
|Source: Postbank Research|
The US economy proved stable: capital spending remained the growth driver along with consumer spending. US GDP rose by a solid 3.5%, while foreign trade again impacted economic growth. The current account deficit, already extremely high, increased further to US$790 billion or 6.3% of GDP.
Asia remains the number one growth region, despite a slight economic slowdown. GDP in Japan grew by 2.8%. China continued to record outstanding economic growth: industrial production was the driving force behind growth of almost 10%.
In the first half of the year, the economy in the euro zone suffered from the strong euro and high oil prices. Although exports and investments as well as consumer spending showed somewhat higher levels of growth over the rest of the year, GDP could only manage growth of 1.3%.
The export industry proved to be a growth driver in Germany. Exports rose by 6.2%, and the trade surplus accounted for the major part of the GDP growth of 0.9%. However, domestic demand remained a weak point. Business confidence in the development of the economy increased substantially in the second half of the year.
Prices on the international crude oil markets continued to rise in 2005. Brent crude traded at an average price for the year of US$54.5 per barrel – more than 40% higher than the previous year.
At the end of 2005, the euro was quoted at US$1.18, representing a fall of 13.4% over the course of the year. The euro also fell slightly against sterling during 2005.
The international equity markets recorded substantial price gains in 2005, although they were impacted by high oil prices and continual key rate increases in the United States. In the course of the year, the EURO STOXX 50 rose by 21.3% and the DAX by 27.1%, while the S&P 500 had to settle for an increase of 3%.
On balance, long-term interest rates decreased slightly over the course of the year in the euro zone, even though the European Central Bank raised its key rate in December for the first time in five years. In contrast, yields rose slightly in the United States. The continued extremely low level of interest rates again created a favorable environment for corporate bonds.