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Geschäftsbericht 2013, englisch

14 management report – münchener Hypothekenbank eg l annual report 2013 Overall economic conditions management Report 2013 Economic Report Economic development Global economic growth slowed in 2013. In particular, the pace of economic growth in both the industrialised nations as well as the emerging countries was less dynamic as global economic growth declined by 0.1 percentage points to 3 percent. During the second half of the year the outlook for global economic growth increasingly improved as exports and personal consump- tion picked up again in many industrialised countries. The eurozone posted a slight rise in its gross domestic product (GDP) for the first time again during the second quarter the year. This minor recovery was not, however, enough to turn around the eurozone’s economic performance for 2013 as it contracted again and declined by 0.4 percent for the full year. The German economy was unable to distance itself from this economic environment as its GDP rose by just 0.4 percent, which was less than the moderate rise noted in the previous year. This slight growth was primarily driven by personal consumption. Exports were held back by the weaker global economy and the recession in the eurozone. Investments were also unable to stim- ulate the economy as they were 0.7 percent lower than in the previous year. In contrast, investments in construction projects rose by 0.1 percent, although this development did vary from sector to sector: while investments in commercially used build- ings fell notably, they rose slightly in the public-sector and resi- dential building sectors. This improvement was primarily attrib- uted to favourable interest rates available for financing residen-­ tial property. The average annual inflation figure was 1.5 percent and signif- icantly lower than in previous years. However, consumers paid substantially higher prices for food, electricity and gas. The labour market developed favourably as a new employment record was set with 41.8 million people holding jobs in Germany. The number of unemployed climbed marginally to nearly 3 mil- lion causing the unemployment rate to rise by 0.1 percentage points over the previous year’s figure to 6.9 percent. Financial markets European sovereign bond markets increasingly stabilised over the course of 2013. This was mainly due to action taken by the European Central Bank (ECB) with its Outright Monetary Trans- actions (OMT programme) and its assurances that it would de- fend the euro. Even the deadlocked situation in Italy following the parliamentary elections in February and the bail-out of Cy- prus, which forced the participation of private bank depositors, caused only temporary waves in the markets. Moreover, the EU underlined its political will to further strengthen the eurozone by creating the European Stability Mechanism, a permanent fi- nancial assistance programme, recapitalising the Spanish bank- ing sector, and developing a European Banking Union. These actions led to a notable lessening of uncertainties surrounding the continuation of the European Monetary Union during the course of the year. Lessened uncertainties were also reflected in the improving sovereign bond markets and especially for bonds issued by Ireland, Portugal, Spain and Italy, which recorded sig- nificantly narrowing spreads. “Pfandbriefe and other covered bonds were again a sought after asset class in 2013, especially because of their good creditworthiness.” Lower rates of inflation and weak economic data allowed central banks in industrialised nations to continue their expansive mon- etary policies. While the Fed in the USA, as well as the Bank of England and the Bank of Japan, opted to use quantitative mea­ sures such as purchasing government-issued bonds, the ECB de- cided to place greater emphasis on conventional interest rate policy. At the beginning of May and in November it cut its main refinancing rate by 0.25 percentage points each time to its cur- rent historic low of 0.25 percent. The improving development of the US economy allowed the Fed to begin reducing its pur- chases of treasuries and mortgage bonds at the end of 2013. The low interest rate situation and favourable profits booked by German companies fuelled a considerable rise in the German

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