Earnings, Financial Position and Net Worth

Economic environment

In the first half of 2007, the global economy continued to expand swiftly. Europe and Asia contributed in particular to this development. Despite the attempts of the government to dampen developments, the Chinese economy recorded a double-digit growth rate, and India and Russia continued to prosper. The US economy was unable to repeat the high growth rates of past years but its constitution was still stable despite slacker consumption due to the real estate crisis. The International Monetary Fund currently anticipates that global growth in 2007 will come to 5.2 %.

In the period under review, the euro-zone economy was also very upbeat. Driven by the demand for capital and consumer goods, economic activity accelerated in the second quarter, with private consumption recovering, above all in Germany. The business climate stabilized at a high level. At present, many EU countries are using the favorable framework conditions to consolidate their budgets or to pursue a more expansive fiscal policy. This development caused the last growth forecasts for the year 2007 to be revised upwards to 3.0 %.

The upswing in Germany held steady in the first half year of 2007 as well. The main drivers of this growth were initially the demand for capital goods and foreign trade. The construction industry continues its gratifying recovery, and mechanical engineering recorded the strongest phase of employment for forty years. The automotive sector also proved to be extremely robust, driven by exports. With the value added tax hike, introduced on January 1, losing its dampening effect, private consumption started to gain momentum again only in the second quarter. For the financial year 2007 as a whole, the research institutes set growth at around 2.8 %. After the reporting date, some critical studies were published which suggest that the cycle of the current growth phase may have possibly peaked.