The global economy continued to improve in the first half of 2011, with growth again proving to be particularly strong in the emerging economies. The majority of industrial countries also continued to recover, although disparities in growth rates remained unusually high.
The upswing in Asia remains strong on a global comparison despite the fact that growth has slowed somewhat of late. In China, second-quarter GDP was up by 9.5% year on year. Growth in the first quarter amounted to 9.7%. By contrast, Japan suffered severely from the consequences of March’s major earthquake. Economic output fell by 0.9% in the first quarter versus the prior-year period. The second-quarter decrease is expected to have been even greater.
The United States economy slowed markedly in the first half of the year. Whereas investments in machinery and equipment continued to act as a growth driver, the increase in consumer spending was dampened considerably. Moreover, the substantial decrease in government consumption put the brakes on growth as well as negatively impacting the labour market. The number of jobs increased only minimally in the second quarter. Another weak point was the real estate market, where construction spending continued to decline. To prop up the economy, the US Federal Reserve retained its key interest rate at 0% to 0.25%.
In the euro zone, growth is expected to have slowed in the second quarter compared with the start of the year. Investments in machinery and equipment as well as construction spending benefited in the first quarter from the backlog effect arising from the early and severe onset of winter at the end of 2010. The pronounced increases in growth are not expected to have continued into the spring. In addition, the rise in consumer spending is likely to have remained moderate. Based on the sharp increase in the inflation rate, the European Central Bank raised its key interest rate from 1.0% to 1.25% in April and then to 1.5% at the beginning of July.
The German economy saw very substantial growth in the first quarter of 2011, due in part to backlog effects. On an overall basis, however, growth is expected to have been considerably lower in the second quarter than at the start of the year. Unemployment figures have fallen steadily since the beginning of 2011. The economic upswing is confirmed by the ifo Business Climate Index, which was recently fluctuating around its record high.