Euro Area Crisis Dampens Global Growth. Medium-term Forecast of the World Economy Until 2016

The forecast of the world economy until 2016 is based on a global econometric model (Oxford Model). The forecast rests on the assumption that the uncertainty with respect to the solution of the interest rate and debt crisis in the euro area will persist for some time. Therefore, the euro's exchange rate vis-à-vis the dollar is expected to weaken slightly (to $ 1.23) until 2016. In 2012, the oil price (Brent) will fall (to $ 95 per barrel) owing to the international economic slowdown. However, it will return to about $ 110 by 2016. Over the forecast period the prices of other commodities are expected to decline slightly (–1.9 percent per year), not least as a consequence of the appreciation of the dollar. Both in the USA and in Europe average interest rates during the forecast period will be at their lowest levels since more than 60 years.