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Economic Background
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Market Review
Economic Background
The global economic situation in 2011 had two observable phases. As expected, the first half of the
year was characterized by good growth. However, from mid-year onwards, the political upheavals
in the Middle East and the aftereffects of the devastating natural disaster in Japan put a brake on
the economic momentum. Growth in industrialized nations was low in the second half-year and the
large public debt in individual European countries triggered a euro crisis that took on major political
dimensions in some countries and at the level of the European Union. This resulted in another rapid
rise in uncertainty in the financial markets, as a result of which it has been difficult to make any
projections as to the future development of business and markets.
The problems in the euro area, as well as the high debt levels in Japan and the USA, impacted on
the real economy in the fourth quarter of 2011, although the actual consequences will not be felt
until 2012. Against this backdrop, the International Monetary Fund (IMF) lowered its global growth
forecast in January 2012, expecting the global economy to grow by 3.8 per cent in 2011 and by a
mere 3.3 per cent in 2012.
In Europe, the slowing of economic growth in the second half of 2011 also became increasingly evident
in Germany and France, which until then had been considered the drivers of economic growth.
The debt crisis in the euro area expanded, and towards the end of the year the leading economic
indicators signalled a strong downturn. It is expected that in 2012, the recession will not only be
noticeable in Greece and Portugal, but will also hit two major players of the monetary union: Italy
and Spain. The European Central Bank lowered its key interest rate again in December, this time to
1 per cent. The euro area is forecast to grow by 1.6 per cent in 2011 but to decline by 0.5 per cent
in 2012.
Large national debt in Europe
and the USA has slowed global
economic growth.
Central and Eastern Europe has been indirectly affected by these developments, as the euro countries
are major export markets. Against this backdrop, while still expecting GDP to increase by
5.1 per cent in 2011, the IMF has revised its growth forecast for 2012 downwards to 1.1 per cent.
In contrast, economic performance in Russia has continued to be solid, even in the second half of
2011. The high commodity prices proved to be an additional lucrative source of income.
In the USA, the large national debt and the fiscal uncertainties gave rise to insecurities among businesses
and private households at first, but from mid-year onwards the US economy showed a remarkably
positive performance. In September, the Federal Reserve adopted another stimulus initiative;
at 1.8 per cent each, GDP growth is expected to be weak in 2011 and 2012.
Growth remained robust in Latin America, but the decline in foreign demand is likely to lead to a
significant slowdown of economic performance. To counter this development, Brazil lowered its
base rate in September despite high inflation, and the implementation of additional measures was
not ruled out. The IMF has forecast growth rates of 2.9 per cent for 2011 and 3.0 per cent for 2012.
44 palfinger Annual Report 2011