Paris and New York, August 21, 2007 – The global economy is set to expand in the second half of the year in all major regions of the world, according to results of the latest quarterly ICC-Ifo World Economic Survey released today.
The report, conducted by the International Chamber of Commerce and Germany’s Ifo Institute for Economic Research, surveyed over 1,000 economic experts in 91 countries last month, at the same time as a credit crisis touched off by a wave of defaults in U.S. sub-prime mortgages first sparked global jitters.
The Ifo World Climate Index rose to 113.6 this quarter, up a sharp 6.9 points from 106.5 in the previous quarter.
“These results point to a robust world economy in the second half of 2007,” said Hans-Werner Sinn, president of the Ifo Institute, part of the University of Munich.
Headquartered in Paris, ICC is the largest, most representative private-sector association in the world. Its New York-based national committee, the United States Council for International Business (USCIB), works to promote trade and investment worldwide, and disseminates the quarterly ICC-Ifo survey to American business and economic experts.
Economists polled upgraded their expectations for the U.S. economy. U.S. consumer spending is seen stabilizing due to wage growth, and U.S. exports rising due to a strong global economy, keeping in check the fallout from a slowdown in the housing market.
The overall economic climate in Western Europe improved markedly in the recent survey, although growth is seen tempered over the next six months in Spain, the U.K., Ireland, Norway and Denmark. In Asia, economists raised their outlook slightly for the region, with Hong Kong showing the strongest improvement over previsions the previous quarter. The outlook for Japan has also brightened as exports are expected to accelerate due to a weaker yen versus the U.S. dollar, and the outlook for China continues to be favorable.
In Latin America, economists see economic stabilization in the next six months but with large country-by-country variations, with positive growth in the second half seen in Chile and Brazil, while a slowdown is predicted for Argentina and Venezuela. In the Middle East, economists raised their six-month forecast for Turkey but noted the economy in Iran continues to worsen. In South Africa, economists downgraded their six-month outlook due to inflationary pressures and flagging consumer spending.
Except for North America, where inflation is seen remaining at 2.7 percent, experts predict inflation will accelerate to an average of 3.1 percent across all regions of the world besides Australia and New Zealand. In the euro zone, the outlook for inflation increased slightly to 2.1 percent from 2.0 percent. However, inflation in China is expected to rise a full percentage point above the rate in the last survey to 3.7 percent.
A larger number of experts in the current survey said the U.S. dollar is undervalued, although a further weakening of the dollar versus other currencies is expected in the next six months. A majority of economists continue to view the Japanese yen as undervalued. More economists than in the previous survey said the British pound and the euro are overvalued.
Economists hailing from all major regions broadly expect interest rates to rise in the coming six months.
Better data on counterfeiting and piracy needed
Responding to a separate set of questions, most economists surveyed agreed that a comprehensive analysis of the full financial and social impact from counterfeiting and piracy is needed. They also said the problem of counterfeiting and piracy will only be solved when national governments commit adequate resources to strengthen law enforcement and establish effective penalties that deter this criminal activity.
The quarterly Ifo World Economic Survey is conducted in cooperation with ICC and receives financial support from the European Commission. Additional charts and data associated with this latest survey are available at ICC’s website, www.iccwbo.org.
USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment. Its membership includes some 300 U.S. companies, professional service firms and associations whose combined annual revenues exceed $3 trillion. As American affiliate of the leading international business and employers organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade. More information is available at www.uscib.org.
Catherine Foster, ICC
Tel +33 1 4953 2822 or email@example.com
Jonathan Huneke, USCIB
+1 212 703 5043 or firstname.lastname@example.org