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General economic review

World economic downswing

World economic downturn accelerated in 2001. At year-end, the major economic centres noted stagnating growth rates or found themselves already in recession.

With a 1.1% upturn in gross domestic product after a 4.1% increase in 2000, the United States failed to retain its status as the dynamo of the world economy. Increased oil prices and waning consumer confidence

  • depressed further by the events of 11 September – had an impact here.

Against this backdrop, capacities built up during the many years of upswing were no longer utilized, which quickly brought about falls in corporate profits. The result was a further decline in stock market prices, which had still been high at the beginning of the year. In Western Europe, growth fell virtually flat in the second half of 2001. Bolstered by the sustained weakness of the euro, however, growth over the year was relatively stable, reaching 1.7% in comparison with 3.3% in 2000.

Stagnation in Germany

The German economy was also on the brink of recession. In the third and fourth quarters, gross domestic product showed a moderate decrease, while year-on-year growth reached 0.6% (p.y. 3.0%). After the marked corporate restraint witnessed at the beginning of the year and the veri- table collapse of investment, exports also decreased in the second half of the year. So did private consumption, despite an initial boost due to the reduction of income tax. News of job cuts planned at numerous major companies contributed to push consumer confidence to a new low. With an average of around four million people on unemployment registers, the jobless total remained at the preceding year’s level.

General economic review 11

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