Ifo World Economic Climate stabilised - results of the 89th World Economic Survey (WES) July 2005

The Ifo World Economic Climate stabilised in July at the level of the April survey, after the indicator had previously fallen five times in succession. While the assessments of the current economic situation continued to deteriorate, the expectations for the next six months became more favourable. This confirms the impression that the economic slow-down since mid-2004 is only a temporary retarding of worldwide economic activity and not the beginning of an economic downturn. In the course of the second half of 2005, a further recovery of the world economy is likely, according to the WES results. In spite of the sudden rise in oil prices, a growth in inflation worldwide is not expected. For 2005 the survey participants expect consumer prices to increase by 2.9%. That would be exactly the same inflation rate as in 2004. After having increased in value in recent months, few experts see the US dollar as undervalued. On the other hand, after the loss in value of the euro and the British pound, these currencies are now seen as only slightly overvalued.