This month’s Regional Focus puts the spotlight on Asia, highlighting China, India and Thailand. There are signs that the Chinese central bank is increasingly switching its currency reserves into euros. This adds to the upward pressure on the euro against the US dollar.

Our Special Focus examines the connection between infrastructure investment and economic growth. Infrastructure investment represents a promising growth driver for the European economy. There are growing arguments in favor of public-private partnerships for infrastructure projects. Education spending shares many characteristics with infrastructure investment, and should also be recorded as such to a greater extent in terms of statistics.

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

Enjoy!

The US economy is walking a tightrope this winter half-year. After exceptionally strong growth in the third quarter, economic output could stagnate in the closing quarter of the year. The Fed’s ratecutting phase is not over yet.

Growth momentum more than doubled in the third quarter, but is not set to remain so buoyant. We expect key rates to remain unchanged at 4 %. In our view, the ECB’s tightening bias is also designed to avert debate/speculation about rate cuts.

The downside factors for the German economy have increased appreciably. High oil prices and the strength of the euro in particular are crimping growth prospects for next year. Nevertheless, buoyed by private consumption, the upturn is likelyt o continue – albeit less dynamically.

Is the Chinese central bank increasingly switching its currency reserves from US dollars into euros and thus helping to drive the euro up sharply against the greenback? Although little is known about the composition of Chinese currency reserves, a number of signs point to such an investment strategy shift.

In addition to our annual European Growth and Jobs Monitor, which measures the progress made with respect to the Lisbon Strategy, we plan, from now on, to highlight what we believe to be particularly promising growth drivers in another annual feature. This time, the growth driver in question is infrastructure investment. There is a clear connection between infrastructure, or public investment, on the one hand and economic growth on the other. Globalization, public-sector financing woes and efficiency considerations support the use of public-private partnerships for the implementation and running of infrastructure projects. Education spending shares many characteristics with infrastructure investment, and should, in the main, be not only viewed as such, but also recorded as such in terms of statistics to a greater extent than hitherto.