International
Ifo World Economic Climate Indicator signals robust world economy in the second half of 2007
By Finfacts Team
Aug 21, 2007, 11:24

The Ifo World Economic Climate indicator, which is published today, has clearly risen in the third quarter of 2007.

Both the assessments of the current economic situation as well as the six-months expectations have improved. These results point to a robust world economy in the second half of 2007.

The Ifo Institute is a leading German economic research institute and is based at the University of Munich.

The IMF says that this year is the fourth straight year of global growth above 5% - the best sustained growth in the world economy, since the 1950's.

The betterment in the Ifo World Economic Climate Index affected all three major economic regions: Western Europe, North America and Asia. In Western Europe the Ifo climate indicator rose again, after having already reached a six-year high in the second quarter of 2007. The current economic situation has been assessed positively in all countries of the region with the exception of Portugal. However in Denmark, Ireland, Spain and the United Kingdom the surveyed experts expect a growth slowing in the coming six months. In North America, the economic climate has brightened, after the index had fallen in the second quarter below its long-term average for the first time in four years. Both the assessments of the current economic situation as well as economic expectations for the next six months have improved. In Asia the climate indicator also rose.

Inflation expectations for 2007 have remained largely unchanged in the US at 2.8% and in Western Europe at 2.1%. In Asia they have risen slightly to 2.7% compared with 2.4% in April.

On average of the countries surveyed, the US dollar is seen as slightly and the Japanese yen as clearly undervalued. The euro and the British pound are still considered to be overvalued by the WES experts.