Acceleration of Global Economic Growth, Uncertainty about Crude Oil Price and Exchange Rates Remains High. Medium-term Forecast of the World Economy until 2010

The two biggest elements of uncertainty of a medium-term forecast of the world economy, concern exchange rates, particularly between the Euro and the dollar, as well as crude oil prices. The WIFO basic scenario makes the following assumptions: the Euro exchange rate versus the dollar will drop to $ 1,12 by 2007, rising to $ 1,24 again thereafter; the crude oil price (Brent) will stay at a level of roughly $ 62 per barrel until 2008, rising to $ 67 by 2010. Under these conditions world trade should grow by nearly 7 percent between 2005 and 2010, and world production by approximately 4½ percent per year, considerably faster than between 2000 and 2005. Among the industrialised countries, the US economy will continue to achieve a higher growth (+3.1 percent) than EU 25 (+2.1 percent). Economic dynamics will be weakest in Japan (+1.5 percent), Germany (+1.3 percent) and Italy (+1.2 percent). Of the emerging market economies, China (+8.0 percent) and India (+7.1 percent) will continue to achieve the greatest dynamics. The OPEC countries, too, and Russia (+5.2 percent, respectively) should realise strong economic growth, promoted by high crude oil prices.