Last Update:
Mar. 10, 2011
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Economic environment in 2011

For the year 2011, we expect the following economic conditions:

  • Continued recovery of the global economy, solid growth (+3.3%)
  • Weaker growth in the industrialized countries (+2.2%); pre-crisis levels reached in most cases
  • Compared with previous year, growth in Europe (+1.7%) broadly unchanged and somewhat weak
  • Solid growth in the United States (+2.9%); strong growth in Asia (excluding Japan) (+7.4%) and in South America (+4.5%); weak growth in Japan (+1.1%)
  • An average exchange rate of $1.35 per euro
  • An average annual oil price of $90 per barrel

The strong global economic rebound in 2010 was supported by major economic stimulus programs and strong growth in Asia. In 2011, the global economy will continue to recover. In industrialized countries, the austerity programs necessary to trim public spending will dampen growth. In 2011, we expect solid average annual global economic growth (+3.3%). Growth will be weaker in industrialized countries (+2.2%), but production in most of these countries will again reach pre-crisis levels. For 2011, we expect an average oil price of $90 per barrel, and an average exchange rate of $1.35 per euro. As there are continued uncertainties in the capital and currency markets, we anticipate foreign exchange rates will be highly volatile over the course of the year.

Outlook for gross domestic product 2011
(Real change compared with previous year)

Outlook for gross domestic product 2011 (bar chart)

In Europe, our growth expectations for 2011 are dampened by the austerity programs to reduce public spending. We expect domestic consumption will be weak, but demand for capital goods will increase. We forecast growth in 2011 will be nearly unchanged (+1.7%) compared with the previous year. The pace of economic growth in Germany will slow (+2.3%) due particularly to weaker growth in net exports compared with 2010. With a few exceptions, the member states of the European Union will experience positive growth. For the first time since the economic crisis, the European construction industry will grow again. In the medium term, we expect moderate average growth for the European Union (+1.9%).

Trends in gross domestic product 2011–2013
(Average annual real change)

Trends in gross domestic product 2011–2013 (bar chart)

In the United States, economic growth in 2011 (+2.9%) will be at the level of the previous year. High unemployment and the loss of wealth among large parts of the population as a result of the financial crisis will continue to dampen growth in private consumption. Further economic stimulation through expansive fiscal or monetary policy is nearly impossible due to high government debt and very low interest rate levels. On the other hand, increasing investment activity and growing net exports are acting as growth drivers. In the United States in the medium term, we expect steady growth momentum and solid growth (+2.9%).

Economic growth in Asia (excluding Japan) will slow slightly in 2011 (+7.4%) with the winding down of China’s economic stimulus programs, which had been providing an additional boost to economic growth. A further expected appreciation of the Chinese currency will stabilize China’s import growth, but weaken its export economy. Domestic demand should provide positive impetus for the region. In the medium term, we expect high annual growth in the regional gross domestic product (+7.1%), driven in particular by the strong growth in industrial production.

In Japan, economic growth will slow again in 2011 (+1.1%). As a result of weakening global economic growth and the relatively strong Japanese yen, export growth will not match the pace of the previous year. In addition to Japanese consumers’ general reluctance to spend, the end of fiscal stimulus programs will contribute to a normalization of the growth rate. In the medium term, we expect moderate average annual growth (+1.5%).

In South America, growth in gross domestic product in 2011 will be weaker than in the previous year. Nevertheless, the region’s economy is expanding significantly (+4.5%), mainly as a result of increasing domestic demand and rising raw materials exports. In the medium term, we expect robust annual economic growth (+3.8%).

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