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Dr. Jürgen Pfister, Chief Economist and Head of Research. Global Economic Outlook 2012. GRI Europe Summit 2011 Paris, 8 September 2011. Agenda.

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Presentation Transcript
  • World economy under stress: Two-speed recovery, rising commodity prices, ongoing tensions in the financial sector, eroding confidence in public finances, shift in market sentiment from inflation fear to recession panic
  • US economy: Structural rather than cyclical weaknesses
  • Europe: Slow recovery, but upswing continues
  • Sovereign debt crisis in the euro area: Politics vs. markets
  • Interest rate outlook: Low rates for quite a while
Global economy: Two-speed recovery (1)Inflation and seasonally-adjusted GDP vs. trend, quarterly figures, first quarter 2000=100
US: Slow recoveryInflation and seasonally-adjusted GDP, change on previous period in percent, annualized
US: Adjustment to losses in wealth completedPrivate household saving rate in percent and change in net worth in trillions of dollars


1) Saving rate: H1 2011; net worth: Q1 2011

euro area two speed recovery 2 inflation and seasonally adjusted gdp first quarter 2008 100
Euro area: Two-speed recovery (2)Inflation and seasonally-adjusted GDP, first quarter 2008=100
Euro area: Slow progress towards sustainable public financesGeneral government deficit and gross debt as percent of GDP
sovereign debt crisis still unresolved
Sovereign debt crisis: Still unresolved
  • Politicians are “behind the curve“ compared to market participants since the beginning of the crisis.
  • The often-repeated official statement: “We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole and its Member States“ (21 July 2011) is still not trusted by market participants.
  • In the short term, intervention by official institutions (EFSF, ECB) is unavoidable. In the medium to long term, institutional changes (EU treaty) are needed which incorporate a shift of sovereignty in fiscal policy to EU/EMU level.
  • The euro will survive as a stable currency (internally and externally).
Bond markets: Low bond yields for a whileYields on ten-year government bonds, monthly averages in percent
  • The global upswing will continue despite new challenges. But the upswing will continue to be two-speed, with global imbalances, fiscal tightening, a weakened banking system and high commodity prices.
  • The US will continue its (very) risky course in fiscal and monetary policies. The dollar will remain under downward pressure.
  • The European economy will continue to be marked by divergence in 2011. The sovereign debt crisis will be manageable if the political will exists at both national and EU level.
  • Inflation in 2011 and 2012 in the US and euro area will be low. The ECB will continue to raise rates cautiously (year-end: 1.75%).
  • In the euro area yield spreads on government bonds will be wide unless a convincing and lasting solution to the sovereign debt crisis is agreed.
general note
This publication constitutes research of a non-binding nature on the market situation and the investment instruments cited here at the time of the publication of this information on 12 March, 2014. This research is, to the best of our knowledge, based on generally accessible sources which are reliable and accurate. However, no liability can be accepted for any errors or inaccuracies in information derived from these sources. The information used in this publication has not been checked for accuracy, completeness or relevance to current events. Consequently, no guarantee can be assumed for the completeness and accuracy of this report. This publication is for information only. It is not intended as a substitute for individual professional advice on investments and assets. Our investment consultants are at your disposal should you wish to procure additional up-to-date information.General Note
thank you for your attention
Thank you for your attention!

Dr. Jürgen PfisterChief Economist and Head of Research

Phone: +49 (0)89.2171.21750Email: