Global Economy & German Exports

30/01/2012

Global economic growth has again increased significantly after the slump in 2009. After an increase of 5.1% in 2010, the IMF forecasts real GDP growth of 4% in 2011 and 2012.

The latest OECD forecast points in the same direction. In 2011 the OECD expects world trade volume to increase by 7.5% while the current year is geared to reach up to 5%. While economic strengthis falling off significantly in the European industrial countries, the emerging markets are expected to continue their vigorous economic expansion.

In the United States, Germany’s second most important trade partner, economic momentum is now clearly picking up. Quarter-on-quarter GDP growth improved during the past three quarters, from 0.1% in the first quarter to 0.5% in the third quarter. OECD estimates put US GDP growth at 1.7% for 2011 and 2% for 2012. This positive development is mainly being driven by higher consumer spending. The consumer confidence indicator increased in November 2011 for the first time since July 2011. The trade balance also made a positive contribution to this upward trend as US imports grew less than exports. The situation in the labour market remains difficult but the positive signs are becoming more common. The unemployment rate fell to a surprisingly low 8.6% in November 2011. Nevertheless, the OECD expects an annual average unemployment rate of 8.9% for 2012. Compared with the 5.8% annual average in mid-2007, this is still quite high for the United States.

With a share of 8.7% of global production, Japan is the thirdlargest economy in the world. The country is gradually recovering from the effects of the earthquake in early 2011. In the third quarter of last year, its GDP growth increased 1.4% after two quarters of decline. Yet given the two negative quarters in the first half, the OECD still anticipates a slight decline in GDP of 0.3% for 2011. For 2012 the OECD expects a significant increase in GDP of 2%. Current economic indicators support this forecast. In October 2011 Japanese industry posted a 3.2% increasein incoming orders and production increased 2.4%. The business climate index was also stable in that month. At 4.5% in October 2011 the unemployment rate was relatively high by Japanese standards. The OECD does not anticipate any easing in the Japanese labour market in 2012 and the annual average is likely to remain at 4.5%. Japan’s national debt also remains atan extremely high level. Its debt-to-GDP ratio will rise in 2012 toaround 220% (Greece: 177%). This will be a major drag on growth over the medium term.

Eurozone economic performance has dropped significantly since the beginning of 2011. While in the first quarter of 2011 GDP was up by 0.8 percentage points over the previous quarter, in the second and third quarters it only grew by 0.2 percentage points. The natural disaster in Japan and the sharp rise in energy prices in spring played a considerable role in this weak second-quarter performance. In the third quarter the escalation of the debt crisis was largely to blame for a dampening effect in the Eurozone economy. Performance in the economies of the individual member states varied widely. In countries with strong exports and relatively stable public finances – after Germany these are mainly Finland, the Netherlands and Austria – GDP grew significantly stronger than in the so-called peripheral European countries (Greece, Portugal, Spain and Ireland). Recessionary tendencies there increased as a result of consolidation efforts. This created further tensions in the Eurozone. Italy, the third-largest economy in the Eurozone, made a sluggish recovery from the economic crisis due to internal structural problems and the loss of international competitiveness. At 1.6%, growth in the French economy is likely to be roughly half that of Germany’s in 2011. According to estimates by the ifo Institute, total Eurozone GDP grew by a mere 1.5% in 2011. The institute expects Eurozone GDP to decline by 0.2% in 2012. If non-eurocountries Britain, Sweden and Denmark are included in the equation, the EU-20 will post growth of 1.5% in 2011 and 0.1% in 2012.

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