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Raw material prices limit growth of global economy
Despite the heavy increase in energy and raw material prices, the global economy expanded further in the past year. In particular, low capital market interest rates, an expansively oriented monetary policy and the favorable profit situation of many companies compensated for the dampening effect of the heavy price increases. The slight weakening of growth in the global economy in the third quarter of 2005 was overcome toward the end of the year. From 5.1% in the previous year, the gross domestic product (GDP) rose by 4.3% worldwide in 2005. A significant factor in this development was the structure of the wage and monetary policy, which did not lead to any wageprice spirals. The global economic imbalances intensified, however. While the trade balance deficit in the USA rose to over 6% in relation to the gross domestic product, China’s surplus, and that of the oil-exporting countries, increased considerably.

In the euro zone, the economic dynamics remained subdued. While private demand was weak as a result of the increase in oil prices and low consumer confidence, the situation in industry improved slightly. In the EU countries, the gross domestic product rose by 1.3% in 2005. Of the large EU countries, Spain recorded the highest increase with 3.2% and Italy the lowest with 0.4%.

After the natural disasters in the United States and a slight normalization of fuel prices, which had risen dramatically in the course of the year, the mood in the American economy improved again at the end of the year. Toward the end of the year, the US economy appeared to be in solid shape. The US dollar even gained some ground against the euro. In Brazil, the economic upturn that began in 2004 continued. In 2005, the significant rise in exports also revitalized domestic demand and led to an increase in employment.

With an increase of 9.2% in the gross domestic product, China was Asia’s growth driver once again. The heavy price increases worldwide were triggered by the high raw material and energy requirements. Exports and the foreign trade surplus rose to a new record level. China posted an export surplus of EUR 91.6 billion in trade with the USA alone, leading to intensified demands for further steps to be taken in the currency and exchange rate policy and for restrictions on imports.

In Japan, the economic expansion continued despite the high oil prices; further progress was made in the economic recovery following the long period of problematic development. As a result of the continuing price decline, the Japanese central bank maintained its expansive monetary policy.