General economic conditions

Although the global financial system was in robust condition in fiscal year 2014/15, risk factors for the world economy increased. Following the debt crisis in Greece and the US Federal Reserve’s expected initial interest rate step, which dominated the first half of 2015, China’s economic development came into focus starting in the summer. Accounting for 16.9 % of the global economy, China is a significant driver of its growth. Furthermore, the country plays an even more considerable role as a raw material consumer on the global markets. This affects commodity prices and thus the economic trend in emerging countries dependent on raw material exports.

Expected GDP growth in 20151)

Chart: Expected GDP growth in 2015

The International Monetary Fund (IMF) corrected its fall forecast for economic growth in 2015 downward, from 3.3 % (July forecast) to 3.1 %. At the same time, the organization also pointed out that a return to robust, worldwide growth is difficult to achieve six years after the deepest global recession since World War II.

Moreover, the IMF World Economic Outlook (WEO) stated that there were distinct differences between industrialized countries and emerging countries. The recovery in the first group is considered only moderate overall despite positive isolated developments. Nevertheless, the upswing continued in the US at 2.6 %. The Eurozone is also on a growth course in 2015 at 1.5 %, with Germany also performing well with plus 1.5 %. The leading German economic research institutes are more confident, predicting economic growth of 1.8 % for the country. Japan registered a positive growth rate for the first time again. However, demographic shifts and a decline in investing activity were highlighted as hindering factors. In the opinion of the IMF, maintaining the loose monetary policy is therefore imperative.

The situation in the emerging countries is a cause for concern, as their growth rates continue to decrease. According to IMF reports, countries that rely on raw material exports are affected in particular, such as the countries of Latin America and those that export crude oil. There has also been a capital flight from emerging countries, estimated by the Institute of International Finance at US US$ 540 billion. While observers have assumed for quite a while that the growth rates would be lower there, the issue only became acute in the summer due to the uncertain development in China. This showed that the transformation to a new growth model isn’t without complications. In Q3 2015 the country’s economic growth fell below the 7 % mark for the first time since the global financial crisis. At 6.9 %, it is at the lowest level since early 2009. In addition, a stock market bubble burst in China, leading to a tumble in prices on the stock exchanges and shaking trust in the political leadership’s ability to implement reform. Massive interventions led to only limited effects initially. Similar developments were evident on the currency market after the external value of Chinese currency was strongly devaluated on August 11.