General economic situation

Mixed development of the global economy

In light of the original expectation of a significant recovery, the development of the global economy proved disappointing last year. Although the economy picked up again slightly following a poor start to the year, overall growth did not accelerate compared to 2013. According to the IMF, the global economy once more grew by 3.3% in 2014. The trend varied from region to region and suffered from the continuing high debt in some areas of the private and public sectors, geopolitical tensions and a slowdown in world trade. Emerging economies tended to have slower growth than industrialized nations.

Slight growth in the European economy

Overall, the European economy had slightly positive growth of 0.8% in 2014, according to the IMF. Following an upturn in the first quarter, growth slackened again over the remainder of the year, disappointing the original expectations. The main reason for this development was reduced investment activity against the background of declining foreign demand and geopolitical tensions. For example, the economic sanctions imposed on Russia had a sustained negative impact on business sentiment. On the other hand, consumer spending provided support. The ECB implemented further monetary easing measures to stimulate the economy. Despite a slowdown in the second half of the year, the German economy showed above-average growth compared to the region as a whole. While the French and Italian economies were sluggish, a significant economic recovery was to be observed particularly in Ireland and Spain. Great Britain’s economy was on a solid growth track in 2014, mainly supported by increasing government spending.

U.S. economy expanding after a sluggish start to the year

After a first-quarter dip due to weather conditions, the U.S. economy picked up significant momentum in the remainder of the year and according to the IMF grew by a total of 2.4%. Growth was driven by robust investment, particularly from foreign countries, a recovery in private consumer spending and a noticeable upturn in the labor market. The much more restrictive fiscal policy and the end of the U.S. Federal Reserve’s bond purchase program have not had any direct negative impact to date. The economy in Latin America produced unexpectedly slack growth in 2014; the IMF assumes a rate of 1.2%. The trend was depressed by a fall in direct investment from abroad, reduced export activities, political uncertainties and a failure to introduce structural reforms. Consumption also slowed markedly because of the weakness in the labor market. The fall in prices of raw materials observed at the year-end appears to have had a further negative effect on the region’s growth overall.

Regionally uneven development in the Asian economy

The economy in Asia developed unevenly from region to region in 2014. Whereas growth remained strong in many of the smaller countries, there was a slowdown in China. According to the IMF, the region overall (excluding Japan) enjoyed the same upward trend as in the previous year at 6.5%, while growth in China was 7.4%. Here, as in other countries, weaker exports in the wake of softer global demand had a dampening effect. In addition, muted growth in production and trade as well as the significant consolidation of the real estate market had negative effects. The Chinese government reacted to sluggish economic performance with tax breaks and infrastructure projects. The central bank also cut interest rates. According to IMF estimates, the Japanese economy grew by only 0.1%, mainly because of weaker-than-expected private consumption. Growth was supported in particular by the strongly expansive monetary policy adopted by the Japanese central bank and the postponement of planned tax increases. In Australia, economic expansion of 2.8% was spurred by strengthening consumption and export activities.