The Ifo Economic Climate in the Eurozone has improved again in the third quarter of 2007. This applies to the assessments of the current economic situation, which are at a six-year high, as well as to the economic expectations. The latest survey results indicate that the economic upswing will continue in the second half of 2007.

The appraisals of the current economic situation were particularly favourable the Netherlands, Finland, Ireland and Luxembourg. Also in Germany and Austria, the WES (Ifo World Economic Survey) experts gave decidedly positive assessments of the economic situation. Within the Eurozone,  only in Portugal was the economic situation again ranked as poor. The expectations for the coming six months are positive in nearly all Eurozone countries. Only in Ireland and Spain do the surveyed experts again expect a growth slowing in the second half of 2007.

The inflation expectations for 2007 still stand at 2.1%, which is slightly lower than for 2006 as a whole (2.2%) but still somewhat above the inflation target of the European Central Bank. The WES experts still anticipate an increase in the key interest rates in the coming six months; also capital market rates are expected to rise somewhat.

In comparison to the euro, the US dollar was seen to be clearly undervalued in terms of fundamentals. Nevertheless, the majority of WES experts expect a further weakening of the US dollar in the coming six months. The Japanese yen is seen as even more strongly undervalued than the US dollar, whereas the British pound is still regarded as overvalued in comparison to the euro.

The Ifo World Economic Survey (WES) investigates world-wide economic trends by polling transnational as well as national organisations in different countries. This allows for a rapid, up-to-date assessment of the economic situation prevailing around the world. The full set of results will be published on 21 August 2007.

The 3rd quarter 2007 Eurozone results, which are published here in advance, are based on the responses of 258 economic experts. WES is conducted in co-operation with the International Chamber of Commerce (ICC) in Paris and receives financial support from the European Commission.

Ifo, the Institute for Economic Research, is based at the University of Munich.