Upward trend of the world economy intensifies

According to the latest results of the Ifo World Economic Survey, the world economic climate in January 2006 was considerably better than in the October survey. The improvement applied to both the expectations and the assessments of the current situation. The recovery trend of the Ifo indicator began already in the second half of 2005. The three positive survey results in succession, in which the judgments of the current economic situation followed the positive expectations, can now be interpreted as a clear sign for the economic upswing of the global economy. On a worldwide average, an inflation rate - measured by consumer prices - of 3.2% is expected. This is insignificantly lower than the rate of 3.3% reported for last year, but clearly higher than the rate expected twelve months ago (2.9%). The US dollar is seen, on average, as slightly overvalued, after having been regarded as undervalued for more than two years. On the other hand, the euro and even more so the British pound are still regarded as overvalued. As in the previous survey, the Japanese yen is considered to be slightly undervalued.