World economic climate brightens
A world survey of business sentiment today showed rising expectations for the global economy although assessments of the current situation remain weak.
The quarterly economic climate indicator of the International Chamber of Commerce and the Munich-based Ifo economic research institute rose to 91.3 points from 83.2 in April.
The increase was entirely due to higher expectations for the next six months, which climbed from 98.2 points to 114.0. The more than 1,100 experts from 91 counties kept their assessments of the current economic situation unchanged at a weak 67.6.
Thus, the upward trend in the economic climate index already apparent at the end of April became more pronounced in July. However, Ifo analysts said it is still too early to draw conclusions about the strength and the length of recovery.
Experience shows that three consecutive positive survey results are required, both for the current economic situation and for expectations over the next six months.
Dr. Gernot Nerb, Ifo's Director of Business Surveys, said: "The world economy is now at a cross-roads. Clearly, chances for a solid economic upturn are improving."
A regional breakdown showed the economic climate improving most strongly in North America and Asia, where it reached long-term average levels, but lagging below average in Europe.
Respondents to the survey include corporate economists from multinational companies, academic economists and chamber of commerce executives.
Dr Gernot Nerb, Ifo Institute
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- On a world-wide scale, consumer price inflation in 2003 is now expected to b e 2.8%, significantly lower than the two surveys in the first half of the year (each 3.2%).
- There are growing expectations of a further decline in short-term interest rates, while long-term rates are expected to remain stable over the next six months.
- The euro is considered overvalued.
- The US dollar exchange rate is expected to strengthen over the next six months.