During the first nine months of the current business year, expectations with regard to the development of the global economy have continued to rise; reality, however, has not always been able to keep up with these expectations. Furthermore, the economic trends have differed widely in the most important economic regions.
In the European Union, signs of a recovery have solidified in the course of the year, although up to the summer months the underlying economic trend was still recessionary. Throughout the entire 2013 calendar year, Europe did not report any growth. In a year-to-year comparison, some slight growth was achieved in the third calendar quarter, and this trend gained some momentum toward the end of the year. One of the pivotal factors for this positive development was, for the first time, the lack of negative news flow relating to the European common currency over the course of several months. In other words, Europe showed, after all, that it is ultimately capable of successfully managing even genuine crises in a politically complex environment. However, this situation went hand-in-hand with an increase in the value of the euro compared to practically all other major global currencies (with the exception of the British pound), which adversely impacted the competitiveness of Europe’s export-oriented industries.
The positive development in North America over several quarters was interrupted in the fall of 2013 by the government shutdown, however, the uncertainty that this prompted was overcome relatively quickly due to the successful political agreement on the budget for the next two years. The tapering process announced by the Fed (reduction of purchases by the Fed of Treasury bonds and mortgage-backed securities) did not result in any noticeable setbacks with regard to the lead economic indicators, a factor that suggests that the positive trend is somewhat robust.
While the emerging markets were able to continue their growth pattern in 2013/14, however, the speed of that growth, in some cases, slowed down significantly. After a surprisingly subdued performance in the previous year, most recently, Brazil, the most important South American market for voestalpine, performed better, reporting a growth rate of 2.5%; this development was sustained almost exclusively by private consumption and government spending, while the production output of the country’s industry and of large parts of its agricultural economy continues to trend downward.
China was able to continue its growth at about 7.5%, a level that is somewhat weaker than in the past but still solid. Growth was driven primarily by investment in infrastructure and real estate. In comparison to prior years, the economy in India and Russia continues to be subdued, while the economic situation in Turkey is being increasingly adversely impacted by political unrest.
Viewed from the perspective of the real economy, the mood, which has become increasingly optimistic during the course of the year, affected the most important industrial sectors quite differently. The European automobile industry, for example, was able to break its long-term downward trend, reporting slight growth toward the end of the calendar year. The turnaround was noticeable particularly with regard to volume producers; as has been the case for quite some time, the premium manufacturers continued to increase their production figures as a result of their strong exports. The consumer goods sector, including white goods, saw a largely stable year in 2013, ending up with a slight plus at year’s end. The mechanical engineering industry was characterized by significantly weaker demand in the business year thus far; toward the end of the year, however, this sector was able to slow the downward trend. The European construction industry remained at a low level throughout 2013.
The exploration segment of the energy sector demonstrated a stable, high-level performance in recent quarters, whereas power plant construction has practically come to a standstill, especially in Europe, and with the implementation of major pipeline projects repeatedly being postponed worldwide. While the most recent award of the South Stream project seems to have signaled the turning point in the oil and natural gas transport segment, there does not seem to be any improvement on the horizon for the power plant construction segment.
The global market for railway infrastructure has remained at a solid level in the business year thus far, sustained primarily by markets outside of Europe that have been able to more than compensate the continued weakness of the European market. The aviation sector and the agricultural machinery industry have maintained a strong level of demand.