Banking & finance

World economic climate newly brightens, according to latest ICC-Ifo survey

  • 16 May 2012
ICC Trade Finance

Results of the ICC-Ifo World Economic Survey, released today, showed a fresh rise in the climate indicator during the second quarter of 2012, reaching 95.0, up from 82.4 in the previous quarter, and confirmed a trend towards recovery in the world economy.

These results are only slightly below the long-term average of 96.7 (1996-2011) for the World Economic Survey, conducted by the Munich-based Ifo Institute for Economic Research and the International Chamber of Commerce (ICC).

Economic experts had an especially positive outlook for the next six months, as indicated in the report by a rise to 101.8 from 80.7. This was complemented by a somewhat warmer appraisal of the current situation, increasing to 87.9, from 84.1 in the first quarter of 2012.

“Improved monetary policy has partly been driving a positive outlook for the next six months,” said ICC Secretary General Jean-Guy Carrier. “In many countries, such as China and Brazil, there has been monetary easing in the form of interest rate cuts. In the Eurozone, some progress has also been made, including the establishment of a new permanent financial umbrella European Stability Mechanism (ESM) starting in July this year.”

Western Europe recovery, outlook for North America continues to improve

After a weak second half in 2011, Western Europe is now entering a recovery phase, climbing back from a steep fall at the end of 2011 (105.2 to 81.4) marking consecutive increases to reach 99.3.

Results for North America also rose significantly for a second straight quarter to 95.4, after a similar drop at the end of 2011, from 81.2 to 69.5.

Both regions enjoyed a significant upward revision of the economic outlook for the next six months, even if views on the current economic situation showed only a slight improvement.

Overall, the economic experts surveyed in Western Europe and North America expect an increase on economic performance over 2012 of 0.4% and 2.4%, respectively.

Asia on upswing after four successive decreases

The economic climate indicator in Asia also started to rise, reaching 90.4, up from 74.6, after continuously falling over the previous four quarters.

As in nearly all regions, appraisals in Asia of both the present economic situation and, to a greater extent, economic expectations were also upgraded significantly.

“In Asia, countries like China have seen a loss of cost competitiveness following 10% unit labor cost inflation between the end of 2009 and the end of last year,” said Gernot Nerb, Ifo Director of Business Surveys. “A calmer development of unit labor costs, however, can be expected in the near future. This, together with a more accommodative monetary policy, which was made possible because inflation slowed down, has improved the outlook in Asia.”

WES experts in Asia predict 4.0% growth.

Inflation estimates nudge up

Inflation estimates for the second quarter of 2012 increased only slightly, from 3.5% to 3.6%. Experts also expect on average a slight increase in long-term interest rates over the next six months.

In terms of currencies, the report indicates that the euro is slightly overvalued and the yen is even more overvalued. The dollar exchange rate is also expected to rise on a worldwide average over the next six months.


The April ICC/Ifo survey polled 1,101 economic experts from business and academic institutions in 121 countries to assess current and expected economic developments. Their answers were analyzed to reach quarterly figures representative of the current global economic climate, situation and expectations.

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