In the second half of 2008, the recessive trends caused energy demand to fall sharply. In December, the oil price dropped to around US $ 40 per barrel, its lowest level since 2004.

Euro hits historic high

In the first six months of 2008, the US dollar was under immense downward pressure. The weak US economy and the crisis on the financial markets prompted the Federal Reserve to reduce its key interest rate seven times in 2008 from 4.25% to a range of between 0% and 0.25%. Since the European Central Bank (ECB) initially held its rate steady at 4%, even raising it to 4.25% in July, the euro’s interest rate advantage over the US dollar increased, bringing it to an all-time high of US $ 1.60. This trend shifted in the second half of the year. Economic weaknesses and falling price pressure provoked the ECB to lower its key interest rate as far as 2.5%. This meant the euro once again depreciated in value against the dollar, closing the year at US $ 1.40. Measured against the pound sterling, the euro posted a 30.1% gain.

Corporate bonds suffer under financial market crisis

In the euro zone, capital market returns rose in the first half of the year but fell sharply thereafter. At the end of the year, ten-year German treasury bonds were yielding just under 3%, some 1.4 percentage points less than at the end of 2007. In the same period, the return on ten-year US treasury bonds fell by 1.8 percentage points to only 2.2%. Although the interest rates have fallen steeply, the climate for corporate bonds has deteriorated. The financial market crisis has unsettled investors to such an extent that risk premiums have leapt right up, even for high-quality corporate bonds.

Slowdown in international trade growth

International trade depends to a large extent on how dynamic global economic development is. Hence, although it did grow again in 2008, this growth was clearly below the prior-year levels on almost all major trade lanes. North American imports even declined.

Furthermore, the growth structure shifted. A look at the trade flows between Asia Pacific and the United States or Europe shows that imports on these lanes are growing faster than exports. At the same time, trade flows within Asia – the second largest domestic market after Europe – are growing much faster than trade flows within Europe.

Compound annual growth rate 2007–2008
%
	Asia Pacific	Europe	Latin America	North America
Asia Pacific	9	7	9	–2
Europe	12	2	7	–3
Latin America	7	4	4	–3
North America	5	5	6	–2

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