Global economy

The global economic upswing continued through the first half of 2007, with most regions showing robust to strong growth. The exception was the USA, where economic growth remained subdued.

After a weak start to the year, the US economy is assumed to have bottomed out in the first quarter. The second quarter already saw a moderate recovery. As the risk of accelerated inflation continues to loom, the Federal Reserve held its key rate steady at 5.25% despite the weak economy.

The Japanese economy is undergoing a broad-based recovery. Powerful stimulus once again came from the export industry, while business investment and private consumption further ramped up domestic demand. South-east Asia’s emerging economies likewise held their growth trend, albeit with slightly reduced momentum. China stood apart in this regard and saw its economy deliver a further growth surge.

The euro zone economy also grew healthily in the first half of 2007. Businesses are unchanged in their positive outlook. Fearing increased inflationary pressure, the European Central Bank raised its key rate by half a percentage point to 4%.

In Germany, a value-added tax (VAT) hike slowed growth at the start of the year but the upswing held its vigour nonetheless. Stronger investment at home and healthy foreign demand drove up industrial production. The ifo business climate index remained at an exceptionally high level throughout.