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1) Source:
German Federal
Statistical Office
2) Source: Deutsche
Bundesbank
7. Performance Report
7.1 General Business Conditions
Positive economic development in the financial year 2007
Once again, the global economy recorded strong growth in 2007. The increase in gross domestic
product (GDP) of 5% was nonetheless slightly lower than the previous year’s figure of 5.4%. The
dynamic economic expansion of the emerging markets continued unabated, led by China and India.
The investment and export sectors were again the main growth drivers. By contrast, the US economic
trend was very uneven in 2007. After weak expansion in the first half of the year, overall economic
production in the summer months gained strong momentum again, driven in particular by brisk
export activity. At the end of the year however, there were growing concerns about the state of the
US economy: Private consumption as the driving force behind the American economy slowed dramatically
in the wake of the subprime mortgage crisis and the extreme price hikes for energy. For the year
as a whole, the real increase in US GDP came to 2.2% (2006: 2.9%).
Conversely, the favorable economic trend in the euro zone persisted throughout the year 2007 as
well. Once again, investment and exports were the main growth engines, while private consumption
remained slack. GDP growth in 2007 (+2.6%) fell marginally short of the previous year’s figure
(2.8%). In the EU as a whole, growth posted 2.9%, boosted particularly by above-average contribution
from Great Britain where the economy has been expanding swiftly for two years.
Macroeconomic Indicators in Germany
%
14
12
10
8
6
4
2
0
–2
Jobless rate 1)
GDP growth 1)
Consumer price index 2)
2003 2004 2005 2006 2007
The German economy remained robust throughout 2007. Total capacity utilization rose once again,
despite the impact of a series of negative events. The restrictive financial policy and exogenous influences,
mainly in the form of much higher prices for crude oil and the repeated appreciation of the
euro, dampened business sentiment and the economic environment. In a comparison of the year as a
whole, however, growth nonetheless came to 2.5% (2006: 2.9%).