World Economic Climate Worsens According to ICC-Ifo Survey

According to the latest quarterly World Economic Survey (WES), published today, from USCIB’s affiliate the International Chamber of Commerce (ICC) and the Munich-based Ifo Institute for Economic Research, the global economic upswing is faltering after the first two improved quarters of 2011.

The World Economic Climate indicator fell by 10 points, from 107.7 in the second quarter of 2011 to 97.7 in the third. It fell based on the assessment of 1,080 economic experts, in 117 countries, who responded to the WES survey questions on both the current economic climate, as well as on the next six-month outlook.

The worsening economic climate is largely the result of a decline in indicator markers in Asia, North America, and Western Europe. The factors attributed to decline, however, are quite different in each of these regions.

In Asia, decline in the economic climate has been attributed to efforts by most Asian countries to moderate their pace of economic growth in order to reduce inflation pressure and maintain sustainable growth. Experts in China, India and Indonesia, in particular, have judged their economic climates more reservedly than others. The economic climate indicator for Asia is still slightly above its long-term average, falling overall by just over seven points from 101.8 in the second quarter of this year to 94.7 in the third.

The biggest drop occurred in North America, from 98.7 to 81.2, in large part due to the United States.

The abrupt drop in economic climate in Western Europe, after two years of constant improvement, is spread unevenly throughout the region, which fell overall from 115.1 to 105.2 points. The climate dimmed in part because previously strong upswings in Germany, Sweden and Switzerland lost some momentum, and in part because of problems in Italy and Portugal, the report indicates. The climate in the United Kingdom also worsened, while the economic climate in France improved.

Latin America was the only region whose economic climate remained unchanged, and Oceania was the sole region to enjoy a rise in expectations.

Inflation expectations have risen slightly worldwide, compared to the previous two quarters. WES experts now forecast an annual inflation rate of 4.0% for 2011, compared to 3.8% in its Q2 survey in April and 3.4% at the beginning of the year.

While the yen and euro are considered somewhat overvalued, the report’s experts thought the British pound and the US dollar were appropriately valued. They also foresee a further worldwide average decline in the value of the US dollar over the next six months, led by an expected weakening of the US dollar in some Asian countries, particularly China, Singapore, Thailand and the Philippines, as well as in Canada and Russia.

Read more on ICC’s website

View graphs of the WES Ifo Survey

Download the full WES Ifo report

Staff Contact:   Jonathan Huneke

VP, Communications and Public Affairs
Tel: 212.703.5043

Jonathan Huneke is responsible for USCIB’s strategic communications, including media relations, publications, online content and high-level public events. He also manages the work of USCIB’s Marketing and Advertising Committee.
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