Economic parameters

World economy remains in the grips of recession

The severe recession continued in the first half of 2009. World trade fell dramatically at the beginning of the year, with export-orientated economies suffering the most from this development. However, since the spring there have been some initial signs that the economic climate will not continue to worsen over the remainder of the year.

Economic output in the United States fell heavily once again at the start of the year. Private consumption did not provide any noteworthy impetus; however, exports effectively propped up the economy. In light of the severity of the financial and economic crisis, the US Federal Reserve kept its key interest rate at between 0% and 0.25%.

In the emerging markets of Asia a recovery may even be on the horizon after an equally weak start to the year, thanks not least to China’s massive economic stimulus plan. GDP in China grew once again year-on-year, rising by 7.9% in the second quarter. Japan, which suffered early in the year from a major collapse in exports and industrial production, is also presumed to have increased its economic output again in the spring.

The economy in the euro zone remained very poor through mid-year. Although the sharp downward trends in exports and industrial production levelled off in the spring, exports and production were consistently well below the prior-year level. The European Central Bank reduced its key interest rate to a record low of 1% in order to boost the economy.

The drop in world trade at the beginning of the year had a greater impact on Germany than on the euro zone as a whole. However, exports and industrial production in Germany also stabilised in the spring, albeit at an extremely low level. This was reflected in the Ifo Business Climate Index – a barometer of German business confidence – which rose in July for the fourth month in a row.