With real growth of more than 3 % in the year under review, the world economy displayed growth performance similar to 2017. (See graphic B.05) However, regional economic developments were more heterogeneous compared to the synchronous upturn in 2017. In addition, growth in global trade slowed noticeably at the beginning of the year, a development that particularly impacted export-dependent economies.
The industrialized countries as a whole were able to maintain their dynamic rate of growth. The US economy played a major role, as fiscal policies helped generate growth of nearly 3 %, which was once again higher than in the previous year. Significantly increased investment by companies served as a key driver of growth, while private consumption remained stable. The economy of the European Monetary Union, in contrast, was unable to continue the dynamic development of the previous year, and grew by just under 2 %. This slowdown in growth was mainly due to decreased foreign trade. Domestic demand, on the other hand, was robust and continued to be supported by the expansionary monetary policy of the European Central Bank. According to preliminary estimates the German economy recorded growth of only 1.5 %. Here as well, a slowdown in exports and a weak period in the manufacturing sector prevented stronger expansion of the economy. Against the background of the Brexit negotiations, the economy of the United Kingdom grew only moderately by about 1.4 %. Slower export growth led to significantly lower growth rates than in the previous year also in Japan.
Economic growth in China slowed somewhat due to lower credit growth, a sluggish real estate market and the negative effects of the trade dispute with the United States. Nevertheless, the Chinese economy achieved the government’s growth target with a rate of 6.6 %. Taken together, the economies of all emerging markets in Asia grew at a rate similar to that of the previous year. Growth was particularly strong in India. Hopes for accelerated growth in South America were not fulfilled. Although the economies of South America began to recover in 2017, the crisis in Argentina and disappointing developments in Brazil have since slowed down the region’s economic growth. Growth in Central and Eastern Europe was also weaker than in the prior year, although this was primarily due to a cooling down of the Turkish economy in the wake of the crisis in that country. In aggregate, the large economies of Central Europe lost only a little of their momentum, and growth of the Russian economy actually accelerated a little. Oilprices were significantly higher for several periodes during the year, which led to slightly higher rates of economic growth in the Middle East. Despite all the regional differences, the emerging markets as a whole recorded real economic growth of just under 4.5 %, thereby almost keeping pace with the growth recorded in the prior year.
Currency exchange rates remained volatile in this heterogeneous growth environment. Against the US dollar, the euro moved between $1.25 and $1.12 during the year. At the end of the year, the euro was approximately 5 % weaker than at the end of 2017. The range of fluctuation of the Japanese yen against the euro was 137 to 125. By the end of the year, the euro had depreciated against the yen by about 7 %. The value of the British pound against the euro was almost unchanged compared with a year earlier. The euro appreciated against other key currencies such as the Russian ruble, the Brazilian real and the Turkish lira with double-digit increases compared with the end of 2017.