Our Regional Focus this month takes a look at non-EMU Western Europe, highlighting the UK, Sweden and Switzerland. In all three countries, the repercussions of the international financial market crisis and the global economic downturn are becoming more and more visible. Sweden and Switzerland are still holding out relatively well, but the UK is clearly feeling the pinch from the correction on the UK housing market. 

In our second Regional Focus we put the spotlight on the Latin American trio Argentina, Brazil and Venezuela. Here, too, the economic momentum is slackening up; at the same time, inflation is spiralling – with the exception of Brazil – to worrying levels.

Our Special Focus deals with the question of how things will develop in Russia after the oil boom. The conclusion we draw is that to attribute Russia’s record growth rates solely to the high oil price would be to overlook a number of other factors. The private service sector and, above all, the construction industry are booming, and the government is striding ahead with its economic diversification by investing in infrastructure, education, research and development. The economic upswing should therefore be able to cope with lower commodity prices.

And, of course, you will also find our monthly reports on the USA, the euro area and Germany.

Enjoy!

 

Thanks to the stimulus package, the US economy has grown by 1.9 % in the second quarter. We can expect a return to more moderate economic momentum initially, due, among other things, to the aftereffects of the rise in energy prices so far.

The European economy is on a downward slide – but to what extent and for how long? Striking the right balance between growth risks on the one hand, and inflationary risks on the other remains a difficult matter for the ECB, which is why it is likely to continue straight ahead for the foreseeable future.

First the price of oil keeps climbing for so long that even the stronger economies start to get out of puff. Then, in reaction to the worsening global economic situation, it suddenly starts to fall considerably. If the price continues to drop, it may prove to be a very effective stimulus package.

In all of the three countries under review, the repercussions of the international financial market crisis and the global economic downturn are becoming more and more visible. Sweden and Switzerland are still holding out relatively well, but the UK is clearly feeling the pinch from the correction on the UK housing market.

“The emerging markets are profiting from the high oil prices, but at high costs for the industrialized countries.” This theory is not commensurate with reality, given that most emerging and developing countries have to import oil and are therefore languishing under the meanwhile declining but still very high oil prices.

 

To attribute Russia’s record growth rates to the high oil price alone would be missing the point. The private service sector and, above all, the construction industry are booming and the government is driving ahead with diversification of the economy by investing ininfrastructure, education, research and development. The aim is to enable the economic upswing to withstand lower oil prices as well.