Joint Economic Analysis in Spring 2008: Economic Activity Hampered by the Repercussions Impact of the US Real-estate Crisis

On 17 April 2008 the economic institutes in the Joint Economic Forecast Project Group presented their spring 2008 forecast to the press in Berlin. In spring 2008 the world economic is overshadowed by the crisis in the real-estate and financial sector in the United States and the worldwide financial market turbulence caused by it. The US is on the brink of recession, in Western Europe economic activity has slowed somewhat and in Japan aggregate demand is only increasing weakly. Nevertheless, the expansion pace of the world economy is still considerable, especially because output in the newly industrialised countries has been increasing strongly. For the forecast period a further slowing of the world economic expansion is expected. The crisis on the US financial markets and the worldwide financial market turbulence are a burden on economic activity. They have led, especially in the United States, to asset losses of private households which is dampening consumption. In particular, however, the financing conditions for enterprises and households have deteriorated. The world economy is also currently being affected by price increases, which have accelerated considerably in recent months. In addition to the continuous rise in crude oil prices, especially food has become considerably more expensive. This is reducing the purchasing power of private households worldwide and benefiting producers of raw materials and foodstuffs.