The world economy
With real growth of about 2.5 % in the year under review, the world economy had its weakest growth performance since the financial crisis in 2009. (See graphic B.05) Unlike in the previous year, this was caused not only by the continuation of disappointing economic developments in the emerging markets, but also by a distinct slowdown of growth dynamism in the industrialized countries. A particularly negative factor was the uncertainty connected with geopolitical developments such as the outcome of the British EU referendum, the attempted coup in Turkey and the ongoing conflicts in Syria and Ukraine. After the weakest start to the year for several decades, global stock markets recovered as the year progressed, but with significant volatility. Raw-material prices also increased slightly again following an initial continuation of the downward trend.
In the generally rather difficult economic environment, the economies of the industrialized countries posted growth of approximately 1.5 %, which is below the prior-year rate of 2.2 %. This applies also to the US economy, which with growth in output of 1.6 % was significantly below the rates of the previous years. While private consumption was still relatively firm, investment by companies stagnated. According to recent estimates, the Japanese economy hardly contributed towards global growth with an increase in gross domestic product (GDP) of just under 1 %.
Among the industrialized countries, it was only the economy of the European Monetary Union that was able to develop in line with its potential, demonstrating a high degree of resilience despite ongoing political risks with GDP growth of approximately 1.5 %. But with the continuation of unusually low inflation rates and a hesitant recovery of lending activities, the European Central Bank supported the economic development by once again increasing its already very expansive measures. The German economy had another very successful year with GDP growth of 1.9 %. Although negative effects of the Brexit referendum were already apparent in the second half of the year, GDP growth in the United Kingdom remained generally solid at about 2 %.
The economic development of the emerging markets was once again disappointing; with a rate of 3.5 %, their growth was only slightly higher than in the year of the financial crisis. This was primarily due to the very unfavorable state of the economies of South America, Russia and the Middle East. Although raw-material prices recovered slightly during the year, countries with significant exports of raw materials suffered from the continuation of low prices. However, fears expressed at the beginning of the year concerning the Chinese economy were not confirmed; on the contrary, with support from fiscal and monetary policies, the country’s economic situation improved, and robust growth of approximately 6.7 % was achieved.
In this partially very difficult global economic environment, currency exchange rates were once again very volatile. Against the US dollar, the euro moved during the year between $1.03 and $1.16. At the end of the year, however, the euro stood at $1.05, which is only slightly lower than at the end of 2015 ($1.09). The range of fluctuation of the Japanese yen against the euro was distinctly wider, with a corridor of 111 to 133 yen to the euro. At the end of the year, the euro had fallen against the yen by about 6 % compared with the end of 2015. Due to the British referendum result in favor of leaving the European Union, the British pound came under considerable pressure and had fallen by about 14 % against the euro by the end of the year. Contrary to the previous year, currencies such as the Brazilian real and the Russian ruble climbed by about 25 % against the euro.