Economic Survey 3-2011

During the summer there was a change of mood in the global economy, and the growth outlook shifted in a negative direction. Economic indicators for activity in the OECD area reveal that growth is lower than many had previously assumed. Even our relatively pessimistic projections for economic growth have proved too optimistic. There is once again great uncertainty in financial markets concerning the ability of heavily indebted countries to service their debt, and this is expressed through a widening of interest rate differentials between securities that are perceived to be safe and unsafe. Share prices have dropped considerably, as have prices for a number of commodities. So far, crude oil prices have undergone little change, however. Unemployment in the OECD area remains at a high level. With prospects of slow growth ahead, there are no grounds to assume that unemployment will fall. The inflation rate is moderate and is currently influenced by high energy prices, high food prices and increases in indirect taxes that probably have a transitory effect on consumer price inflation. The emerging economies are still experiencing growth, in some cases quite high, but growth rates are falling. The authorities in these countries are trying to curb growth by tightening economic policy, amongst other things by raising key policy rates. In the USA and Europe, by contrast, interest rate increases are expected to be postponed because of the change in the growth outlook, and some central banks have already announced this.