Ifo Indicator for the World Economic Climate Falls Clearly

The Ifo World Economic Climate worsened further in the first quarter of 2009. The indicator has fallen to a new historic low. The decline was solely the result of more unfavourable assessments of the current economic situation; the expectations for the coming six months improved somewhat. The export and import expectations of the WES experts indicate a clear decline in world trade in the first half of 2009. Average inflation expectations for 2009 are clearly lower than the inflation rates of the previous year. Moreover, price increases will continue to weaken in the course of the next six months. In light of the recessionary tendencies and the clear slowing of price increases, a further decline in central bank interest rates is expected nearly everywhere. Also long-term interest rates are expected to fall in the coming six months, according to the WES experts, albeit less than short-term interest rates. The euro is still regarded as overvalued by the WES experts.