The focus of this month’s “Economy & Markets“ is on our economic forecast for 2008/2009.  Following what was probably a fairly buoyant first quarter the German economy is likely to lose momentum in the coming months. Fundamentally, however, it will remain on an expansion path. Given healthy labor market figures and rising wages, private consumption is set to provide a substantial boost in 2008, having languished for years. The impetus to growth from foreign trade will ease markedly in the coming months given the strength of the euro and the less dynamic world economy. An appreciable and sustained pickup in aggregate demand is not on the cards until the fourth quarter. In 2008 as a whole real economic growth is set to come in at 1.8 %. For 2009 we expect growth of 2.2 %, with more than half actually coming from private consumption.

In early 2008 the world economy and above all the international financial markets are in the shadow of the US property crisis. We do not expect to see any decisive impetus coming from either the USA or Japan. However, thanks to continued strong momentum in the emerging markets the world economy is likely to record (GDP-weighted) growth of just under 3 %. In 2009 global GDP growth will move back well above the 3 % mark. World trade is set to expand by 5 to 6 % in 2008 and 6 to 7 % in 2009.

The April issue also contains a report on the USA while this month’s Regional Focus takes a look at Central and Eastern Europe, spotlighting the Czech Republic, Hungary, Poland, Russia and the Slovak Republic.

Enjoy!

The US economy is expected to remain in poor shape for the time being. However, the adjustment processes in residential construction and external trade are making progress. In conjunction with the stimulus package, this brightens prospects for the second half of the year.

It is particularly annoying when you have money but are unable tospend it. Or to put it slightly differently: when spending it would trigger other negative consequences. This is precisely the unfortunate position Russia has found itself in for some years now.

Following what was probably a fairly buoyant first quarter the German economy is likely to lose momentum in the coming months. Fundamentally, however, it will remain on an expansion path. Having languished for years, private consumption is likely to provide a substantial boost in 2008 given healthy labor market data and rising wages. In early 2008 the world economy andinternational financial markets are very much under the aura of the US real estate crisis. Economic growth in the euro area already lost appreciable momentum in the fourth quarter of last year. With the pace of growth set to remain weaker in the first half of this year, we expect the EMU economy to expand by 1.8 % in 2008, accelerating slightly to 2 % in 2009.