Economic Climate
World economic growth in 2007
continued to increase robustly at circa 5%, a similar pace of growth to
2006. Western European growth was circa 2.6%, again similar to 2006
figures, driven by the large economies of Germany and UK.
With the US subprime housing market crisis undermining confidence and leading to a slowdown in consumer spending, the North American economies grew slower than western Europe, while emerging markets continued to be buoyant. The overall growth in emerging markets of approximately 7% reflects Latin America growing at 5%, eastern Europe at above 6% (Russia 7.5%), and Asia (ex. Japan) at more than 9%. In Asia, China again grew in excess of 10%, so that the growth pattern of the world economy remained similar and emerging markets continue to grow in their importance to the global economy.
Raw material prices were at an all time high in many areas due to increasing demand from emerging markets and raised concerns due to food price inflation. Although this does not create a problem for Symrise as a company due to the diversified raw material portfolio, the inflationary impact may restrict central banks’ possible reactions to weakening consumer markets. Also, the weakening US dollar has been an area of concern for the world economy.
Going
forward, the major economic think tanks forecast a slight slowdown of
global growth, mainly driven by lower growth in the US and western
Europe, and also express some concerns about the longer term effects of
the subprime crisis and associated credit crunch, which may affect the
financial sector, but also limit access to and increases the cost of
capital for enterprises.
