annual report grupo security - Banco Security

G L O B A L E C O N O M YThe year 2007 produced a very favorable international economic scenario. Global growth remained robust, theterms of trade showed a further improvement and financial conditions continued to be expansive, with historicallylowinterest rates and spreads, despite the high volatility on the financial markets in the second half of the yearas a result of the real-estate adjustments in the United States and their propagation to other sectors of theeconomy.The global economy in fact expanded by 4.8%, completing five years of growth over the historic average. Europe,Emerging Asia and Latin America stood out within this growth rate.In this scenario, the dollar showed some weakening at the global level, especially against the currencies of emergingcountries. The average copper price, for its part, rose by 6% in 2007 over the year before, to US$3.23 per pound,widely exceeding market expectations, while the oil price rose from an average of US$66 per barrel in 2006 to US$72in 2007.There were also different factors in 2007 that benefited emerging countries. In addition to the solid world growthand the high prices of raw materials, there were the cuts in the federal funds rate in the United States. The FederalReserve Bank reduced the interest rate by 100 basis points netween August and December, to end the year at 4.25%p.a.. The 10-year Treasury Bond yield was mainly quoted in a range of 4% to 5%.5.3%5.4%4.8%4.8%4.8%26.8523.828.624.1%22.53.1%2.6%18.3113.2912.0711.56WORLDVIX20002001200220032004200520062007World growth (%) and volatilityimplicit in the S & P (points)SOURCE: GRUPO SECURITY