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The global economic climate remains favourable and will continue to develop positively during the rest of the year despite a slight weakening of business expectations, according to the results of the latest ICC/Ifo World Economic Survey.

The quarterly economic climate indicator of the joint ICC/Ifo poll, conducted in July, dipped to 109.2 from 110.1 in April but remained clearly above its long-term average of 93 from 1990 to 2003.

“These results are typical for the latter phase of a cyclical recovery,” said Dr Gernot Nerb, Ifo’s Director of Business Surveys. “The only slight weakening of the business expectations and the high level of the indicator as a whole, indicate that the world economy will continue to develop favourably in the second half of 2004.”

The poll surveyed some 1,178 economic experts in 89 countries. Jointly conducted by the Paris-based International Chamber of Commerce (ICC) and the Munich-based economic research institute, Ifo, the survey is the only one of its kind to give a global overview of business confidence.

A regional breakdown shows that the climate indicator fell most clearly in Asia, reflecting the cooling of the overheated economy in China. In Japan, however, the poll showed economic recovery has finally taken hold. The decline in the climate indicator in North America was the sole result of less optimistic expectations for the coming six months in the United States, whereas the assessments of the current situation have clearly improved vis-à-vis the April survey.

In Western Europe the climate indicator has not yet reached the level of the other world regions, but there are growing indications for a slight acceleration of the previously moderate economic growth.

Other key findings of the poll include:

  • In Western Europe, the lowest marks for the current economic situation were given in the Netherlands, Portugal, Germany and Italy, whereas, in the other countries in the euro area the present economic performance was assessed as satisfactory
  • The economic climate in the Nordic countries outside the euro area (Denmark, Sweden, Norway, and Iceland) and in the United Kingdom is still significantly better than the euro area.
  • The present economic situation in the eight Eastern European countries that joined the European Union on May 1 – Poland, Hungary, Czech Republic, Slovakia, Slovenia, Estonia, Lithuania and Latvia – has been assessed considerably above the satisfactory level.
  • The economic climate in Russia deteriorated somewhat, however, the overall economic performance in the biggest economy of the region remains buoyant.
  • Growth in the Asian region will continue to be robust though at a slower pace than in the beginning of 2004. Buoyant intra-regional trade, strength of domestic demand, revival of tourism and moderate growth in the major industrial countries will continue to contribute to the economic stabilization of the region.