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Global Business Conditions

Economic environment1)

Following the weak winter months in 2015/16, global economic growth gathered momentum in the period under review. While, at the start of the year, the weak phase in the second half of 2015 still exerted a certain influence, February marked the beginning of a price uptrend in raw materials and energy sources delivering the first positive stimulus that varied depending on the region. With the advent of summer, the global economy noticeably picked up the pace. In the US, the inventory cycle, combined with an upturn in exports, resulted in expansion accelerating. Supported by economic measures, China developed better than initially expected, while in Russia the recession slowed. In the UK, the impact of Brexit has so far had less of an impact on demand than predicted. Overall, the International Monetary Fund (IMF) estimated the global economic growth rate at 3.1 % in 2016, virtually unchanged compared with the previous year (2015: +3.2 %).

The eurozone's economic recovery held steady in 2016. After a comparatively strong expansion during the first months of the year, momentum slowed slightly, however, as the year progressed. The main drivers consisted of private and public consumer spending. By contrast, investment activity declined in the second half of the year. Growing political uncertainty caused by the Brexit referendum is also likely to have been a contributing factor. The regional development remained disparate. Whereas Spain and many smaller euro countries achieved strong growth, the economies of Italy and France, reported merely modest expansions. The current IMF survey indicates growth of 1.7 % for the eurozone (2015: 2.0 %).

Germany’s economy also reported a moderate upswing in 2016. Not least thanks to the low price increases, accompanied by stable wage developments, domestic consumption remained the mainstay of growth. Another increase in the number of gainfully employed is also likely to have been a contributing factor. Alongside consumption, capital expenditure, particularly in construction, proved to be the second mainstay of this development. Foreign trade, by contrast, curbed economic development slightly due to markedly higher imports despite the increase in exports. The IMF puts the growth of the German economy at 1.7 % in 2016 (2015: 1.5 %). According to the German Federal Statistical Office, the growth rate in 2016 was somewhat higher at 1.9 %.

1) Information was obtained mainly on the basis of the following sources: International Monetary Fund (January 2017): World Economic Outlook Update, German Steel Federation (Wirtschaftsvereinigung Stahl): Steel Forecast 2017; ifo economic forecast 2016–2018; German Federal Statistical Office, February 2017

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