Economic developments
With GDP expansion of 5% in 2007, the world economy displayed strong growth for the fifth consecutive year. A positive trend in many industrialized countries and a lasting boom in most emerging markets provided a broad basis for the upswing. However, growth weakened in the United States due to the sub-prime crisis and its effects on the real-estate market. This has increased the risk that the dynamic growth trend will be interrupted.
In the euro zone, growth of 2.6% was slightly weaker than in the prior year. However, unemployment figures continued falling as a result of the increased economic activity, and most member states made progress with budget consolidation. The further appreciation of the euro against the US dollar that started in autumn might have a dampening effect on growth, but this will not be felt until some time during the year 2008.
- In Germany, total economic output increased by 2.5%. This growth was due in equal parts to increases in exports and in investment, while private consumption stagnated as a result of the increases in taxes and other wage deductions.
- Economic growth in France was below average, the lower competitiveness of French industry compared with Germany was reflected by falling exports.
- Among the major economies of the European Union, the United Kingdom was in the lead with growth of a good 3%, aided by dynamic private consumption and lively business investment.
- Of the smaller economies of Western Europe, in addition to Ireland, Spain and once again Finland, Sweden and Norway posted particularly high growth rates of between 3.4% and over 4%. Developments in the Scandinavian countries also featured high government budget surpluses and further falls in unemployment.
- The economic catching-up process continued unabated in most of the new EU member states in Eastern Europe. In Poland, for example, economic growth accelerated to 6.5%, driven by strong consumption and high levels of investment in plant and buildings. The rate of growth in Hungary, however, halved to just below 2% as a result of the efforts made to balance the budget.