2010 - Moving along

The year is marching on. It is still too early to draw any conclusions, but from an economic perspective, 2010 has been largely in line with expectations thus far. The global economy has continued on the path to recovery following the crisis, and has actually made far better progress than international organizations like the IMF predicted at the end of last year. The IMF particularly underestimated the German economy, which at the end of 2009 was still forecast to grow by only 0.3% this year.

We had expected that those economies with less pressing debt problems would manage to shake off the crisis and report stronger growth than the economies that were stuck in a debt rut. 2010 confirmed this forecast, evidenced by the high growth in China, not to mention Germany's growth advantage in the euro area. At the moment, the economic disparity in the euro area is extremely pronounced. Countries in the midst of a consolidation effort in the state and private sector are lagging in terms of economic recovery. In the US, the much-needed savings drive, particularly those implemented by private households, are increasingly taking its toll on the economy. The US economic recovery has lost considerable momentum and the country will not be the growth engine of the global economy for the foreseeable future, which was to be expected. However, this does not mean that the US economy is necessarily about to lapse into a new recession.

Dr. Michael Heise

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