The signs of strong economic bounceback are shaping up more distinctly as the global economy resurfaces from the state of shock into which it descended as from last autumn. But that is no reason to sit back complacently. Even if production does pick up sharply in the second half-year and capacity underutilization is reduced – which is the scenario we expect – the negative repercussions of the financial and economic crisis on future growth will not have been banished.

Notwithstanding the recent bond market recovery, the lows marked by US and European government bond yields at the end of 2008/beginning of 2009 are a thing of the past. Yields on 10yr US Treasuries are over 100 basis points, and German bunds 40 basis points higher than at the end of 2008. At first sight this does not appear to be in tune with the real economy. After all, in the first quarter of 2009 most of the major industrialized countries suffered the sharpest drop in overall output since the Second World War, and in the second quarter only some of the production losses were offset, despite growing glimmers of hope. So why this marked rise in yields? Several theories are currently being put forward.

Asia was hit particularly hard by the financial and economic crisis as booming exports had been the major driver of economic growth in recent years. Between 2004 and 2008 real gross domestic product in the region rose by an average 8% a year, making Asia the most dynamic region in the world by a long way. The heavy reliance on exports resulted in an economic slump in the financial and economic crisis, on a scale last seen in the Asian crisis of 1997/1998. For 2009 we are forecasting fairly low growth of 2.7%

Germany’s real gross domestic product (GDP) has taken a tumble unprecedented in the history of the Federal Republic. However, this is not fully in line with sentiment in the German economy. How come sentiment is not as bad as the slide in GDP would suggest?

Dreaded toxic assets: the general perception is that a lot more is still lurking out there. According to the IMF and its latest “Global Financial Stability Report”, the bill for the world’s financial sector has now swollen to the enormous figure of USD 4,100bn; banks have to shoulder some USD 2,800bn. Although financial firms around the world have already recognized more than USD 1,300bn of losses (USD 950bn by banks), the “reality-gap” has in fact risen. So, with its new estimate the IMF did nothing less than remove the light at the end of the tunnel for banks. The figures sit oddly with the recent stabilization of the financial sector. However, the markets, jaded by an overflow of bad news in the past, seemed to decide simply not to listen and continued with the rally of bank stocks.

The three largest economies in East Asia – China, Japan, and Korea – are much more closely integrated and are much better prepared for the coming upswing than widely perceived in Europe.

The financial crisis marks the beginning of a new era on financial markets. Massive change has set in. This creates the opportunity to rebuild a strong system that operates on a sufficient capital base, where the risks accumulated in financial institutions balance sheets correspond to their risk-bearing capabilities, where corporate behavior is aligned to long-term return incentives instead of short-term leveraging and speculation and where investors and borrowers can count on long-term stability and are advised in their best interest. Business models will have to change, we need better regulation and more effective international supervision, with a holistic view on risks, combining micro- and macro-prudential perspectives.

Following the nosedive since autumn 2008 the German economy will soon be over the worst. Despite the prevailing uncertainties the economists at Allianz regard a recovery from mid-year as the most likely scenario. The positive boost from the stimulus packages, low interest rates and the massive drop in commodity prices are starting to have an effect.

The long-running commodity boom came to an abrupt end in the summer. Previously, prices had been vaulting from record to record in ever shorter intervals, in the end seeming to defy fundamental factors. Now our expectations have been confirmed and disillusionment has set in. Within the twinkle of an eye commodity prices slid on a broad front. Has speculation had the wind taken out of its sails? What were the triggers, how far can the correction go?

The positive Constitutional Court ruling for the government and the AKP removes considerable uncertainty from the country. The economy will benefit from this. Other challenges remain, e.g. the international capital markets have hit choppy waters in the wake of the subprime crisis in the US. How will Turkey accomplish the balancing act between the tricky domestic political situation and the confidence of international investors upon which it relies given its substantial foreign capital requirements?

For years now China’s economic momentum has been cracking all records. But it is now increasingly being mooted that China could be hit by a sharp slump in growth after the Olympic Games. Is the Chinese economy heading for a hard landing?

Russia‘s economic growth exceeded 8 % in 2007, almost reminiscent of Chinese growth rates. No one, including ourselves, had expected such economic momentum. The economic success is attributable primarily to the surge in energy prices which, albeit in aweaker form, have propelled aggregate demand. But to attribute the booming economy solely to oil and gas would certainly overlook other factors. In Russia‘s major cities, the private service sector is flourishing - not surprisingly, given the country‘s great need to recover lost ground. And, as is currently the case in nearly every emerging market, the construction industry is booming.