Last Update:
March 1, 2012

Economic environment in 2012

For the year 2012, we expect the following economic conditions:

  • Global economic growth at prior year’s level (+2.7%)
  • Significantly weaker growth in industrialized countries (+1.5%)
  • Slow growth in gross domestic product in the European Union (+0.5%)
  • Stronger growth in the United States (+2.0%) compared with prior year; continued high growth in Asia (excluding Japan) (+6.6%); stronger growth in Japan (+2.4%) thanks to substantial economic recovery; growth in South America at previous year’s level (+3.9%)
  • An average exchange rate of $1.30 per euro
  • An average annual oil price of $110 per barrel

We expect the global economy to continue to grow in 2012. However, uncertainty in the financial markets regarding the development of the national debt crises in the eurozone and the United States dampens growth prospects. Nevertheless, we expect average annual global economic growth to match the previous year’s level (+2.7%). Economic growth in the industrialized countries is likely to be significantly weaker (+1.5%). For 2012, we anticipate an average oil price of $110 per barrel, and an average exchange rate of $1.30 per euro. As in previous years, we anticipate highly volatile exchange rates over the course of the year.

Outlook for gross domestic product 2012
(Real change compared with previous year)

Trends in gross domestic product
(Average annual real change)

Uncertainty regarding the development of the national debt crises in the eurozone dampens the growth outlook for the European Union in 2012. Growth in domestic consumption and demand for capital goods will likely weaken compared with the previous year. We anticipate slow growth in gross domestic product (+0.5%). In Germany, we expect economic growth to slacken considerably (+1.0%); as an export-oriented economy, Germany will be affected by the weak growth of its important trading partners. In the medium term, we expect average economic growth for the European Union of 1.2%.

For the United States, we forecast stronger economic growth (+2.0%) in 2012 than in the previous year. We expect the labor market situation to improve and private consumption, which represents more than 70% of gross domestic product, to pick up again. As a result of the high national debt and the very low interest rate level, we do not anticipate any further economic stimulus in the form of expansive fiscal or monetary policy. Strong earnings at U.S. companies and favorable exchange rates will likely help to increase exports and investing activity. In the medium term, we expect the U.S. economy to grow by 2.5% annually.

We assume that economic growth in Asia (excluding Japan) will lose momentum in 2012, but will still remain high (+6.6%). Particularly in China, growth will likely be dampened by lower demand for exports; we also expect a slight appreciation of the Chinese currency. In Asia (excluding Japan) in the medium term, we anticipate annual growth in regional gross domestic product of 6.9%, driven by the strong growth in industrial production.

In Japan, we forecast a substantial economic recovery in 2012 due to the clearance of a large part of the damage caused by the earthquake and tsunami disaster. We anticipate that the country will experience substantial economic growth (+2.4%). However, due to slowing global economic growth and the strong Japanese yen, growth in exports is likely to be weaker. In the medium term, we expect annual growth of 1.9% due to the economic recovery.

In South America, we anticipate that gross domestic product growth in 2012 will match the level of the previous year (+3.9%). Interest rate hikes are likely to have a negative impact on domestic demand. We expect monetary policy to be shaped by efforts to combat rising inflation. In the medium term, we forecast annual economic growth of 4.1% thanks to positive growth impetus from Brazil.

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