Mercedes 2012 Annual Report Download - page 82

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3 | Management Report | Business and General Conditions
Against the backdrop of the global growth weakness, the
emerging markets grew at an overall rate of approximately 4.5%,
which is significantly more slowly than in the prior year (5.9%).
The development in China was particularly worrying. Growth
there slowed down continuously and fell below the 8% mark
for the year as a whole. In India, economic expansion fell from
7.5% in 2011 to significantly less than 6%. High inflation rates
dampened private consumption, and the resulting high central-
bank interest rates reduced investment activity. Also in other
emerging markets, there was a negative impact from hesitant
export demand and turbulence on the financial markets due
to the debt crisis in the euro zone. Economic growth in Eastern
Europe and Latin America was significantly weaker than in
the prior year with rates of approximately 2.5%, after well over
4% in 2011.
In this difficult global economy, exchange rates were once
again very volatile. Against the euro, the US dollar fluctuated
over the year in a range from $1.20 to $1.35. But at the end
of 2012, it was close to the level of early 2011 at $1.32 to the euro.
The fluctuation of the Japanese yen to the euro was even
higher, within a corridor of ¥95 to ¥114. By the end of 2012, the
euro had gained nearly 14% against the yen compared with
the beginning of the year. Against the British pound, the euro
closed the year with a slight depreciation of 2%, after rather
less volatile movements towards the end of the year.
Economy and markets
The world economy. With growth of approximately 2.5%, the
world economy expanded in 2012 at a below-average rate and
more slowly than the growth of 3.2% recorded in the prior year.
 3.04 Overall, 2012 was a difficult year for the world econ-
omy, which was significantly affected by structural adjustments
caused by the financial crisis in the years 2008 and 2009.
One major negative factor was the sovereign-debt crisis in the
European Monetary Union (EMU), which not only affected the
economy of the euro zone, but also triggered considerable turmoil
on the financial markets. At the same time, there were sharp
fluctuations in the price of crude oil – primarily driven by geo-
political unrest. And then in the summer months, key economic
leading indicators worsened so much that the danger of recession
increased considerably. Major central banks reacted to this
by taking significantly expansive measures. This applies above
all to the Chinese Central Bank, the US Federal Reserve and
the European Central Bank (ECB). Although the situation improved
somewhat following these actions, investor and consumer
uncertainty remained very high in 2012, and the resulting crisis
of confidence prevented any stronger economic expansion.
Developments in the industrial countries were disappointing
with economic growth of 1.2%, a similarly weak level to that of
the prior year, and once again significantly lower than their
long-term potential. Although the Japanese economy was still
stimulated in the first half of the year from reconstruction
efforts after the disaster of 2011, it subsequently lost so much
impetus that gross domestic product (GDP) decreased once
again in the third quarter. In the United States, both consump-
tion and investment developed weakly. Private consumption
was dampened by the continuation of relatively high unemploy-
ment. And companies became more unwilling to invest as
the year progressed, primarily due to fears of the “fiscal cliff”
anticipated for the beginning of 2013. But as the real-estate
sector supplied positive impetus once again, the US economy
achieved overall growth of just over 2%.
The EMU posted the weakest development in the year under
review. Not only did the hard-hit peripheral countries remain
in recession, but larger economies such as Italy and Spain
slipped into clearly negative growth. The two largest countries,
France and Germany, also lost a lot of their growth impetus.
While the French economy stagnated, the German economy
achieved growth of 0.7% due to a strong first half of the year.
But strong economic headwinds also in Germany led to slightly
negative growth in the fourth quarter. In total, the EMU there-
fore posted a GDP decrease for the year of approximately 0.5%.
The period of the summer months was particularly alarming,
when concern about the disintegration of the euro zone reached
its peak. It was only due to the announcements made and
measures taken by the ECB in September that the situation did
not escalate any further and the financial markets calmed down
again somewhat. However, the structural problems of the indi-
vidual countries were not solved, so the European sovereign-
debt crisis was by no means overcome at the end of 2012. The
countries of Western Europe outside the EMU did not remain
unaffected by the unfavorable environment, and also the British
economy was unable to expand over the full year.
Gross domestic product, growth rates in %2011
Economic growth
2012
Total Western
Europe NAFTA Asia South
AmericaEastern
Europe
Source: IHS Global Insight
-1
3.04
0
1
2
5
4
3