Earnings, Financial Position and Net Worth

Economic environment

After global economic output contracted severely due to the global financial and economic crisis during the first months of the current year, a persistent recessionary trend was also evident in the second quarter. The slump in industrial nations was caused primarily by the drastic decline in investment activities and exports which shrank at double-digit rates. The economic situation in many emerging markets, such as Russia, for instance, was partly dramatic. By contrast, the economies of India and of China in particular proved to be relatively robust not least owing to extensive stimulus packages launched by their respective governments. The news of the last few weeks of the reporting period strengthened the assumption that the global economic crisis may have bottomed out. The impact of the huge blow to confidence dealt by the insolvency of the US bank Lehman gradually lost its bite across the globe. Both the sentiment barometer and the provisional economic indicators of a number of different countries have brightened. For instance, new orders registered in the USA have stabilized and construction activities have ceased to shrink. Japanese exports and the country’s private consumption have also started to grow again. It is, however, not possible to predict how sustainable these developments will be, particularly after expiry of the international stabilization measures which are due to end next year. The International Monetary Fund (IMF) corrected its global economic growth forecast for 2009 as a whole to -1.4 % on July 8.

The improvement of key sentiment indicators in the euro zone is based on the expectation of the recession potentially having reached its trough by mid-year. The downtrend of the gross domestic product (GDP) had continued unabated up until this point in time. Sharp economic slowdown was recorded in the Eastern European countries in particular. By contrast, countries such as Germany, France, Spain or Italy suffered less drastic distortions, following on from weaker growth. From the second half of the year on, extensive economic stimulus packages are expected to take effect, and the foreseeable end to destocking could trigger a rise in the production level. Whether this will induce a sustained upswing remains to be seen. ZEW is currently predicting a GDP decline of 4.1 % for the year as a whole in the euro zone.

The recessionary trends persisted after the first three months when Germany’s economy developed more negatively than originally predicted by experts. The strong dependency of German companies on exports had a particularly dampening effect in view of the fact that exports declined by 9.7 %. Demand for industrial goods slumped, as many companies adjusted their investment activities to the economic situation. Consumers’ steady propensity to spend proved a mainstay of the economy, along with the scrapping premium and the imminent increase in pensions. Generally speaking, the number of experts who believe that the macroeconomic situation may have stabilized in Germany has recently been on the rise. The IMF is currently anticipating a decline of 5.6 % in GDP for the year as whole.