Economic environment

The global economy grew only moderately in 2014. After a positive start to the year, the economy in the European Union grew faster than in 2013; however, it temporarily lost momentum over the course of the year. The U.S. economy was able to quickly recover after a weather-related slump at the beginning of the year, slightly outpacing the previous year’s growth rate. The Japanese economy was dampened by a sales tax increase. In China, growth declined slightly but remained at a high level. At 2.5%, global gross domestic product increased at about the same rate overall as in 2013 (+2.4%1), which was less than we had originally forecast for 2014 (+2.8%). The average crude oil price for Brent blend fell to $99 per barrel (2013: $109 per barrel).

1 Figures that refer to previous years could deviate from last year’s report due to statistical revisions.


growth in global gross domestic product


growth in global industrial production


growth in global chemical industry

Trends in the global economy in 2014

The year 2014 was characterized by weak economic development. While the construction industry in western Europe benefited from a warm winter, economic activity in the United States was hampered by unusually cold weather at the beginning of the year. The economy in China also got off to a slow start in 2014 before the government’s economic support measures temporarily accelerated growth somewhat. The conflict in Ukraine intensified over the course of the year. Aside from the negative effects of mutually imposed sanctions on trade with Russia, uncertainty with regard to the further development of the crisis contributed heavily to dampening expectations for the European economy and led to a reduced appetite for investment.

Gross domestic product – Real change compared with previous year
Gross domestic product, Real change compared with previous year (bar chart)

Economic trends by region

  • Economic development in E.U. slack and uneven
  • U.S. economy grows faster than in 2013
  • Growth in Japan and South America considerably weaker than in previous year

Economic development in the European Union was slack and uneven. At an overall rate of 1.4%, gross domestic product nevertheless grew faster than in the previous year (2013: +0.1%). While the United Kingdom enjoyed robust growth, Spain and Germany were the only larger eurozone countries to show positive development. Italy remained in recession and the French economy stagnated. By comparison, the eastern E.U. countries observed solid growth rates. Particularly in Poland, Hungary and the Czech Republic, growth was substantially higher than in 2013. In Germany, business expectations turned considerably gloomy after the first quarter. Economic performance even dipped slightly in the second quarter, especially as construction spending declined while private consumption grew only weakly. Growth accelerated somewhat over the rest of the year, and Germany’s gross domestic product grew as a result by an average of 1.6% for the year (2013: +0.2%).

In the United States, average growth for the year was somewhat higher than in 2013. In the first quarter of 2014, cold weather and cyclical inventory effects led to a significant decline in gross domestic product. Over the rest of the year, the economy grew by around 4% on average, with momentum coming from investment activity and private consumption. Against this background, the upward trend in the labor market continued unabated; the unemployment rate dropped below 6% in the fall.

In the emerging markets of Asia, growth receded slightly in 2014. A major reason for this lay in the slowing economic dynamic in China (2014: +7.7%; 2013: +7.4%). The positive influence of the Chinese government’s stimulus measures following the unusually weak first quarter had less of an impact than in the past. Lower housing prices and the downturn in construction activity had further negative effects. Compared with the previous year’s averages, currencies in many of Asia’s emerging markets – such as India, Indonesia and Thailand – lost considerable value relative to the dollar.

In Japan, the economy in the first quarter of 2014 was marked by massive advance purchases in private consumption. Following a sales tax increase in the second quarter, gross domestic product fell temporarily and did not stabilize again until the end of the second half. Seen on average over the year, the Japanese economy stagnated. The end of deflation brought about by an expansive monetary policy initially had a negative impact on the real economy: Real income fell, as salaries did not keep pace with the increase in consumer prices.

Gross domestic product in South America grew at a significantly slower rate than in the previous year. The economic situation in Brazil deteriorated dramatically compared with 2013. Consumer confidence dropped considerably over the course of the year. Investors, too, adopted a restrained approach before the presidential election in the fall of 2014. After record growth in the previous year, the agricultural sector was only able to make a small contribution to growth. The Argentinian economy shrank by around 2%. Growth was hampered by the sharp depreciation of the local currency and high inflation, in addition to uncertainty surrounding the outcome of the negotiations with international creditors and the lack of access to capital markets.