World economy climate clearly improved

In October 2003 the Ifo Institute conducted its 82nd round of the Ifo World Economic Survey (WES), querying more than 1,000 economic experts of multinational enterprises and competent institutions in 91 countries. According to the latest results, the WES indicator for the world economy climate has climbed noticeably and now stands at 100.2 points, clearly above its long-term average (94.1 for the period 1982 to 2002). In contrast to preceding surveys, the improvement of the entire indicator was the result of both more optimistic expectations for the next six months and better appraisals of the current economic situation. This supports the expectation that the economic recovery of the world economy will accelerate. On average for the world economy, consumer prices are expected to increase by 2.9% in 2003, which is only insignificantly higher than in July (2.8%) and much lower than estimates at the beginning and in the Spring of 2003 (in each case 3.2%). In the euro area, inflation is seen to be under the 2 percent mark (1.9%), although the span of inflation is still large, extending from 1.1% in Germany to 3.6% in Ireland. As in the July survey, the euro and the British pound were seen as slightly overvalued, on average, in the 91 countries included in the survey. On the other hand the US-dollar and the yen appeared to be undervalued to the WES experts.