The world economy
With real growth of more than 3 % in the year under review, the world economy had its strongest growth performance since 2011. (See graphic B.05) Both the industrialized countries and the emerging markets contributed to this positive development, as the economic upturn was once again relatively broad-based and synchronized for the first time in several years. During the year under review, the economic situation of the emerging markets, which accounted for nearly two thirds of global growth, improved significantly. A key driver of this development was the increase in prices for industrial raw materials, which were approximately 20 % higher on average compared with the previous year. The acceleration of global growth was even more remarkable in view of the fact that the risks associated with geopolitical developments remained relatively high.
The industrialized countries also benefited from the favorable global economic environment, as these nations increased their growth rates to just over 2 %. The US economy played a major role here, posting growth in output of 2.5 %, which was significantly higher than the growth recorded in 2016. Increased investment by companies following the decrease in 2016 served as a key driver of growth, while private consumption remained stable. Developments were very positive also in Japan, where gross domestic product (GDP) rose by about 1.8 %.
The economy of the European Monetary Union was particularly strong in the year under review: Growth of around 2.5 % represents a significant improvement on the figure for 2016. This was largely due to a higher contribution from exports. The European Central Bank (ECB) also supported this development with its ongoing expansionary monetary policy in response to low inflation rates. The German economy recorded above-average growth (2.2 %) in a long-term comparison for the fourth consecutive year. Despite a significant decrease in private consumption, the economy of the United Kingdom posted GDP growth of 1.8 %, so the economic impact of the Brexit negotiations continued to be limited.
With a real growth rate of just over 4.5 %, the emerging markets finally succeeded in overcoming the economic difficulties they had experienced over the previous two years. The turnaround was particularly pronounced in South America, which recorded slight growth of just over 1 % in 2017 after undergoing a substantial downturn in the prior year. The economies of Eastern Europe also bounced back noticeably during the year under review. The growth rate for the region more or less doubled, largely due to the recovery of the Russian economy. Despite receiving less support from fiscal and monetary policy, the Chinese economy continued to benefit from previous measures in this regard, and with a growth rate of 6.9 %, China actually posted a slight increase in growth compared with the prior year. The economic situation in the Middle East remained problematic, with growth clearly below the long-term trend.
Currency exchange rates remained volatile despite the favorable global economic environment. Against the US dollar, the euro moved during the year between $1.03 and $1.21. At the end of the year, the euro stood at $1.20, making it around 14 % stronger than at the end of 2016. The range of fluctuation of the Japanese yen against the euro was 116 to 135. By the end of the year, the euro had appreciated against the yen by about 9 %. The British pound once again fell against the euro (by approximately 3.5 %), but this decrease was not nearly as pronounced as the decrease recorded in 2016. The euro also appreciated against other key currencies such as the Russian ruble, the Brazilian real and the Turkish lira, in some cases recording double-digit increases.