Select Page

Ifo World Economic Climate brightens slightly

The Institut fuer Oekonomie (Ifo) at the University of Munich released its results of the Ifo World Economic Survey (WES) for the 3rd quarter 2014.
The Index for the world economy rose to 105.0 points from 102.3 points in the previous quarter. Both assessments of the current economic situation, as well as the economic outlook, improved somewhat versus April.
World economic activity remains on the rise. The risks, however, have grown: almost three quarters of the WES experts surveyed believe that rising energy prices and supply shortages pose a moderate to high potential threat to the world economy.
“The driving forces behind the world economic climate result primarily from North America with an increase of 3.4 points in the Ifo index (USA: 5.9) and Asia with a plus of almost 10 points. The index for Europe, by contrast fell (-0.9), and particularly sharp decreases were reported in the Near East (-5.7) and Latin America (-5.4 points). In Latin America the Ifo index fell to its lowest level since the end of 2009,” said Hans-Werner Sinn, President of the Ifo Institute According to a WES special question on the expected negative impact of the Ukraine conflict, experts, especially in direct neighbouring countries, cited negative effects in terms of trade channels, as well as energy prices and supply. Experts in geographically distant regions like Latin America, Oceania, Asia and Africa, by contrast, reported that the impact of the conflict is relatively minor.

Inflation expectations remain unchanged on worldwide average at 3.2%. While the expected price increase has declined steadily for over a year in Europe, price expectations in North America and Asia were upwardly revised.
The experts surveyed expect long-term interest rates to continue to rise over the next six months, although somewhat less frequently than in the last survey. In their opinion, short-term interest rates should remain largely stable for the next six months. The US dollar and the Japanese yen are perceived to be undervalued on worldwide average; while the Euro and the British pound are seen as overvalued. Overall, experts expect the US dollar to strengthen in the next six months.
Hans-Werner Sinn
President of the Ifo Institute

About The Author

Do NOT follow this link or you will be banned from the site!