Global economy continues upward trend

According to the ifo Institute in Munich the global economic climate has significantly brightened up in the third quarter of 2007. This applies to both the current economic situation as well as to the six-months economic outlook. The ifo economic index increased by seven to 113.6 points hitting a seven-year record high. These findings of the “Ifo World Economic Survey” (WES) for the third quarter 2007 indicate a sustainable worldwide economic upswing in the second half of 2007.

This positive development of the ifo global economy index applies to all the three major economic regions, i.e. Western Europe, North America and Asia: For Western Europe the ifo indicator increased once again after it had already hit a six-year high in the second quarter this year. In all coutries of the region with the sole exception of Portugal the current economic situation is seen positively.

However, experts expect a slight cyclical downturn for Denmark, Ireland, Spain and Great Britain over the six months to come. The index for North America was back rising after it had fallen for the first time in four years beneath its long-term average in the second quarter. The economic climate index for Asia increased too.

Inflation is expected to remain almost unchanged in 2007 in both the US with 2.8% and Western Europe with 2.1% whereas inflation is expected to rise slightly in Asia (with 2.7% as compared to 2.4% in April). The number of experts who think that key interest rates and capital market rates will increase slightly rose as compared to the previous survey.

The US dollar is considered to be slightly undervalued while the yen is seen to be significantly supervalued. With regard to the Euro and the British pound, however, WES experts think that these currencies are still supervalued. GERMAN