This month‘s Regional Focus is on Asia, looking at China, India and Indonesia. In the past the region has experienced a number of speculative bubbles which burst with a loud bang. China, above all, repeatedly comes under suspicion that something similar could occur there again. Stocks have already fallen sharply – but this has not triggered a crash in the real economy. The wealth loss accompanying the plunge in share prices does not even reach the level of private household savings in a single year. The main forces powering Chinese economic growth are stronger than the corrections of “irrational exuberance.“

Our Special Focus looks at the economic outlook for sub-Saharan Africa which is currently benefiting from the commodity boom. There are growing signs of a new dawn in the region, political and economic stability has increased. Will Africa manage to catch up economically with the emerging markets in Asia and Latin America this time?

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

Enjoy!

The US economy is staying afloat. Indicators for business investment were surprisingly positive. However, the energy price trend casts a major question mark over further economic development.

The EMU economy proved surprisingly resilient in the first quarter, but will have a rude awakening as early as the second quarter. The now inverted yield curve is another ingredient in the cocktail of problems for the economy going forward.

There is much to suggest that the German economy will already slow down considerably this quarter following the rip-roaring start to the year. Whether this will just be a summer recess for the economy depends not least on further oil price developments.

The economy in Japan also got off to a surprisingly strong start to 2008. However, a growing number of indicators already point to a loss of economic steam this quarter. Given the prevailing economic risks, the Bank of Japan is likely to keep interest rates low in 2008 despite higher prices.

There can be no doubt: In Asia there have been speculation bubbles which burst with a mighty bang. The loudest bang could be heard when the Japanese bubble popped on the country’s equity and real estate market nearly 20 years ago. Then came the Asiancrisis 1997/98. Now bubbles are suspected in China.

After more than two decades of glum economic news from Africa, there are growing signs that the tide is turning. We expect to see real average growth of 6 to 7.5 % over the next ten years. Such momentum can spawn a sustained upswing in sub-Saharan Africa. The economic outlook is particularly promising in the countries of western and southern Africa.