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Trends in the global economy

Trends in the global economy in 2012

  • Growth in global gross domestic product not as sharp as in previous year (+2.2%) and remains lower than our original forecast (+2.7%)
  • Renewed intensification of debt crisis in several eurozone countries; dampening effects from emerging markets
  • Extraordinarily large economic fluctuations throughout the year
Gross domestic product 2012
Real change compared with previous year
Gross domestic product 2012 (pie chart)Enlarge image

Worldwide economic growth was significantly weaker in 2012 than in the previous year. After a positive start to the year, the debt crisis intensified once again in several eurozone countries. Dampening influences on the global economy also came from the emerging markets, especially from China. In this environment, Japan’s economic recovery proceeded more slowly than expected. At 2.2%, global gross domestic product therefore did not rise as sharply as it did in 2011 (+2.7%) or as we had originally forecast for 2012 (+2.7%).

The 2012 business year was characterized by unusually stark economic fluctuations. After showing positive development at the beginning of the year, leading economic indicators turned bleak as the year progressed. Investors and consumers were particularly unsettled by the intensification of the debt crisis in the eurozone. The situation on the capital markets stabilized after the European Central Bank’s resolutions supporting the euro, ratifying the Fiscal Pact and setting up the European Stability Mechanism. Company and consumer behavior remained cautious, however, due to continuing real economic risks in the eurozone and United States.

Development by region

Gross domestic product decreased slightly in the European Union (2012: –0.3%; 2011: +1.6%). Development in the region was shaped by strict consolidation measures in several of the large member states. Gross domestic product shrank in Spain and Italy; it stagnated in France and the United Kingdom. Only Germany was largely able to detach itself from this development until the fall, when it, too, saw a significant slowdown in the business climate, in new orders and in the job market. Compared with the region as a whole, economic growth in Germany was nevertheless above average (2012: +0.7%; 2011: +3.1%).

In the United States, the economy grew slightly faster than in the previous year (2012: +2.2%; 2011: +1.8%). Consumer confidence rose over the course of the year, due in part to decreasing long-term unemployment rates. After extremely weak development in the real-estate market in 2011, housing investments picked up again in 2012, accompanied by supporting measures from the Federal Reserve. Unlike Europe, the U.S. economy was not burdened with sweeping measures to consolidate public budgets. The propensity to invest markedly declined, however, in light of anticipated austerity measures in 2013.

The effects of the European debt crisis were clearly noticeable in the export business of Asia (excluding Japan). Gross domestic product in the region therefore grew at a slower rate than in the previous year (2012: +5.7%; 2011: +7.0%). In China, economic growth declined due to the lower demand for exports – especially from Europe – as well as to cautious investing activity (2012: +7.8%; 2011: +9.1%). Economic development weakened in India, as well, compared with the strong growth momentum of the previous years (2012: +5.1%; 2011: +7.9%).

In Japan, gross domestic product grew more slowly than expected (2012: +2.0%; 2011: –0.5%). The export business was increasingly hindered over the course of the year by the appreciation of the yen relative to the euro and weakening demand in Europe.

Weaker demand for raw materials dampened the economy in South America (2012: +2.4%; 2011: +4.5%). Brazil in particular posted an unexpectedly slow growth rate (+1.0%). However, economic growth in Brazil accelerated over the course of the year, boosted by interest rate decreases and government incentives.