General economic environment
Economic experts are expecting the global economy to grow at a faster rate in 2015 than it did in 2014. The international forecasting institute The Economist Intelligence Unit Ltd. (EIU)1 is therefore projecting an increase in global gross domestic product (GDP) for the full year 2015 of 2.9 percent. Growth in 2014 was 2.5 percent. The EIU is forecasting growth in global industrial production (IP) for the full year 2015 of 2.8 percent (2014: 2.5 percent).
Dynamic trends in the growth regions, which include East Asia and North America, are still being seen as the strongest driver of global economic development. Although the GDP growth forecast for China in 2015 has recently been revised down, structural adjustments are expected to stimulate growth. Moreover, the experts are assuming that recession can be avoided in the eurozone countries and that the recovery is gathering pace in Germany and in Europe. Overall, global consumption is expected to increase due to low oil prices.
Nevertheless, there are still a number of risks that might have an impact on the global economy. Economic development could be adversely affected by the large number of geopolitical crises. Other factors which might continue to hamper growth are considerable ongoing government deficits, currency fluctuations and persistently high unemployment in many industrialised countries. In addition, uncertainty has been created by high levels of volatility in the financial markets.
Economists are expecting different rates of growth in different regions of the world in 2015.
Once again, it is anticipated that the greatest economic growth will be in the Asia/Pacific region. The EIU is forecasting an increase in GDP in this region for the full year 2015 of 5.8 percent. For the first time, India is expected to overtake China as the fastest-growing economy, with projected GDP growth of 7.3 percent (2014: 7.0 percent). Industrial production in India is even forecast to more than double, from 1.4 percent in 2014 to 3.9 percent in 2015. Nevertheless, China’s GDP growth is expected to remain very high at 7.0 percent (2014: 7.4 percent). Industrial production in China is expected not to increase quite as fast as in 2014. It is projected to rise by 7.0 percent in 2015, compared with the actual increase in 2014 of 8.3 percent.
In Australia, the institute is predicting GDP growth of 2.9 percent (2014: 2.7 percent). This increase will come primarily from the expansion of the service sector, which dominates the Australian economy, generating around 80 percent of the country’s GDP. A weaker economic environment continues to be forecast for manufacturing industry in Australia. It is also anticipated that investment in the mining industry will continue to decline.
For the EMEA region as a whole (Europe, Middle East, Africa), growth of 1.6 percent is forecast for 2015, the same as was achieved in 2014. The projection for Germany of 1.8 percent is slightly higher than the figure for 2014 of 1.6 percent. Industrial production in Germany is also expected to be higher in 2015, with a projected increase of 1.8 percent compared with 1.5 percent in 2014. In the UK, economic experts are forecasting GDP growth of 2.7 percent (2014: 2.6 percent). In Eastern Europe and the Middle East, economists are now, as expected, predicting a relatively low increase in GDP of 0.9 percent (2014: 2.1 percent). All the same, industrial production here is forecast to increase by 1.5 percent (2014: 2.3 percent). In South Africa, Linde’s largest market in Africa, economists are anticipating GDP growth of 2.2 percent, which is significantly higher than the figure of 1.5 percent achieved in 2014.
In the Americas region as a whole, economic output is currently expected to rise by 2.7 percent in 2015 (2014: 2.2 percent). The main driver of this trend is the United States, where GDP growth of 3.2 percent is being forecast for 2015 (2014: 2.4 percent). Gross domestic product in South America is expected to remain very weak with GDP growth of only 0.2 percent (2014: 0.6 percent).
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