Markets, business climate and legal environment

Overall economic development

The hallmarks of 2010 were the global economic recovery and the sovereign debt crisis. The picture around the world was a very mixed one: emerging markets as well as developed countries – first and foremost Germany – linked with them through strong export relationships enjoyed a vigorous upturn. Growth in some countries on the Eurozone periphery, however, was curtailed by the spreading sovereign debt contagion and corresponding austerity efforts.

The eruption of the sovereign debt crisis was triggered by the downgrading of Greece’s credit rating and the rapid increase in risk premiums for Spain, Portugal and Ireland too – as well as Italy as the year progressed. The European Union and the International Monetary Fund (IMF) approved a bailout package for Greece and additionally agreed upon a safety net – comprised of credit commitments – for Eurozone countries at risk. Ireland was the first country to avail itself of this assistance, taking out loans of EUR 85 billion in November.

Unemployment in the United States remained stubbornly at a historic high of 9.4%, just 0.5% lower than at the end of 2009. Convincing corporate profits across all reporting seasons provided a ray of light, and hence the US generated third-quarter growth of 3.2% year-on-year. The figure for the Eurozone was 1.9%. Germany took over as the driver of growth within the Eurozone, recording an increase of 3.6% for the full year.

Change in real gross domestic product relative to the previous year 1)
 

2010 1)

2009

% change relative to the previous year

   

USA

+2.9

–2.6

Eurozone

+1.7

–4.0

Germany

+3.6

–4.7

United Kingdom

+1.7

–4.9

Japan

+4.2

–6.3


1) Source: Commerzbank, Economic and Market Monitor, valid: 17 January 2011; 2010: provisional figures

Despite monetary policy intervention by the US Federal Reserve and the European Central Bank on a massively expansionary scale, inflation in both regions remained on a modest level. The inflation rate in the United States in November 2010 stood at 1.1% relative to the previous year, while in the Eurozone the figure was 1.9% and in the United Kingdom it was 3.3%. In the latter case, however, an increase in value-added tax and exchange rate effects both played a significant role. Core inflation reached historic lows in 2010, standing at 0.8% in the US in November, 1.1% in the Eurozone and 2.5% in the UK.

Movement of the euro relative to other currencies
Linechart: Movement of the euro relative to other currencies

The euro depreciated against the US dollar from 1.43 USD/EUR to 1.19 USD/EUR. The bailout package for Greece and the subsequent establishment of a rescue fund for affected Eurozone countries gave the single currency some breathing space, as a result of which it had recovered to 1.34 USD/EUR by year-end. The movement of the rate against the pound sterling was almost a mirror image: the rate slipped from 0.89 GBP/EUR as the year progressed to 0.81 GBP/EUR and then recovered by year-end to 0.86 GBP/EUR.