Global economy still in spirited upswing
The conditions for continued strong growth in the world economy are favorable for 2007. Growth in global gross domestic product (GDP) is expected to be only slightly weaker than in the previous year, while global trade will again grow robustly. Leading economic institutes and organizations forecast an increase of between 7% and 8% (IMF: 7.6%, OECD: 7.7%).

Risks arise from the USA, which has been experiencing an economic slowdown since mid-2006 and where GDP growth is accordingly expected to be noticeably lower at 2.5% in 2007.

Japan saw broad-based economic growth again this year. Exports are anticipated to increase further, although not as sharply as in the previous year. GDP is expected to be up 2%. In China, there are no signs of a slowdown with GDP growth again projected at a healthy 10%.

The upswing in the euro zone will continue. Buoyed by domestic demand and investments, GDP should grow by around 2% – not as robustly as last year.

The German economy will have to absorb a VAT hike from 16% to 19% early in the year, but should not be hampered for long by this development. Exports and investments remain stable, while consumer spending is recovering thanks to improved labor market statistics. GDP will remain on a clear growth path, with this figure forecast to rise by around 2%.

The risk of repeated sharp price increases on the crude oil market has waned, but cannot be ruled out entirely. It is expected that average oil prices for 2007 will remain approximately at last year’s levels.

Whereas the US Federal Reserve is expected to hold key interest rates steady in the coming months, the ECB will again raise key rates. As a result, we expect capital market interest rates in the euro zone to rise somewhat from their current low levels during the year.

We continue to see favorable conditions in stock markets, although economic uncertainty in the USA could lead to sharp price volatility in the course of the year.