Growth Dynamics Exposed to Conflict Between Easy Monetary Conditions and Fiscal Restriction. Medium-term Forecast for the World Economy Until 2017

The projection of global developments until 2017 has been established by means of an econometric model for the world economy (Oxford model). It is assumed that fiscal policy in the EU will in future give greater consideration to the demand-dampening effects of too swift and too one-sided consolidation measures than it has done in the recent past and will hence add growth-stimulating incentives to the policy stance. Uncertainty about the handling of the financial market, banking and debt crises in the euro area is set to last for still some time. Thus, the euro exchange rate against the dollar is expected to moderate to 1.21 $ by 2017. The reference price for crude oil (Brent) should edge down to 100 $ per barrel in 2013, but rebound to around 115 $ by 2017. Interest rates in the USA as well as in Europe will on average over the forecast horizon keep at the lowest level since World War II.