Overall economic development

The global economic upturn was sustained on a high level in 2007. The growth rate of the world economy at 4.8% was roughly stable, once again driven principally by dynamic expansion in emerging markets and the Eurozone.

Although the crisis on financial markets that began to set in during the second half of the year had no immediately discernible curtailing effect, a trend towards increased risks of cyclical slowdown could be discerned. These risks were, however, masked by continued rapid economic growth in the BRIC (Brazil, Russia, India, China) markets.

In the United States, on the other hand, there could be no mistaking the softening tendencies: after the economy had picked up modestly in the first half-year, the incipient subprime crisis ushered in a cyclical cooldown. The resulting repercussions for the financial and capital markets took their toll on growth as the year progressed. Consumer prices rose considerably more sharply than in the previous year on an annual average, and the core inflation rate of 2.4% was thus in excess of the 2% target set by the Federal Reserve Board. The favorable movement on the labor market slowed somewhat, and gross domestic product grew by only slightly more than 2%.

The cyclical trend in the Eurozone pushed the aggregate gross domestic product up by 2.6%, hence cementing the positive growth already recorded in the previous year. Considerable differences were observed between the individual member states: a modest upturn in France, Italy and Portugal contrasted with sharply higher growth rates in Finland, Greece, Austria and Spain. In Germany, too, the largest national economy in the Eurozone, business activity built on the positive tone of the previous year. The labor market across Europe also profited from this development, with the unemployment rate falling to 7.4%. EU-wide harmonized consumer prices were, however, still higher than the target level set by the European Central Bank (ECB).

Growth in real gross domestic product