The world economy

At the beginning of 2015, the world economy is on a path of moderate growth. As in 2014, the upward trend this year is likely to be primarily driven by the advanced economies. The emerging economies are not expected to post an increase in their overall growth rate, however.

The US economy should once again deliver a significant contribution to global growth. The prospects there for private consumption and investment are very favorable in view of the positive development of the labor market and the upturn in industrial production. If fiscal-policy friction can be avoided, growth in economic output of about 3% is achievable for the United States.

The economic outlook for Japan is much less favorable, however. Although the second stage of the increase in value-added tax that was originally planned for the fall was postponed, the growth rate expected in 2015 is only about 1%.

The economy of the European Monetary Union (EMU) has not yet accelerated significantly at the beginning of 2015. This has been prevented by the dampening impact of low levels of lending, continued worries about deflation and ongoing uncertainty concerning the Ukraine conflict. Additional factors are the considerable structural problems of large economies such as France and Italy and the continuation of the sovereign-debt problem. But due to the low price of crude oil, the significantly weaker euro, ongoing favorable refinancing conditions and the extremely expansive monetary policy of the European Central Bank, growth in gross domestic product in the magnitude of 1% should be achieved. The German economy should probably develop slightly better than the average for the EMU.

Economic developments in China continue to be of key importance for the world economy. It is still important that the structurally necessary deceleration of economic growth takes place as a controlled process. With assumed GDP growth of between 6.5% and 7%, China’s economy would expand at a lower rate than in 2014, but would still make the biggest individual contribution to global growth. Only moderate improvements are expected for other major emerging economies with the exception of those in Asia. The prospects for economic growth remain rather weak in particular in South America and Eastern Europe. A special case in this context is Russia, where economic conditions have meanwhile deteriorated so seriously that most analysts now anticipate a sharp recession in 2015.

In total, global economic output could expand by approximately 3% in 2015.

With regard to the currencies important for our business, we continue to anticipate sharp exchange-rate fluctuations in 2015. Compared with average exchange rates in the year 2014 (USD/€: 1.33; GBP/€: 0.81), we expect the US dollar to strengthen while the British pound should remain fairly stable against the euro. With regard to the Japanese yen (average for 2014: 140 yen/euro) and exchange rates important to us of various emerging markets, we anticipate increased volatility.

In order to counteract the risks arising for our business as a result of the still very volatile exchange rates, we conduct hedging transactions as far as this makes sense for the various currencies. For the year 2015, we have hedged more than 70% of the exchange-rate risks as of mid-February.

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