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44 Outlook – Opportunities and Risks Management report – münchener Hypothekenbank eg l annual report 2013 Disclaimer regarding forward-looking statements The Outlook as well as other sections of the Annual Report con- tains forward-looking statements related to future expectations and anticipated events. These forward-looking statements, es- pecially those concerning the development of MünchenerHyp’s business and financial performance, are based on planned expec- tations and estimates and are subject to risks and uncertainties. For this reason actual results may differ materially from currently predicted figures. Economic development and financial markets Economic experts agree that the global economy will recover substantially in 2014. The International Monetary Fund (IMF) anticipates growth of 3.7 percent, which – for the first time in five years – will be primarily driven by the growing economic recovery of the industrialised nations. However, the global econ- omy still faces risks that could hinder favourable development. These risks include, in particular, the consequences of the Fed winding down its bond purchase programme; the still unresolved sovereign debt crisis in the eurozone, as well as the unsettled political situation in the Near East, which could lead to a signifi- cant rise in the price of oil if it worsens. The economic outlook for the eurozone has brightened over the past two years following the recession, despite the unchanging risks that could arise from the sovereign debt crisis. Experts an- ticipate economic growth of about 1 percent for 2014. Further- more, countries on the periphery of the eurozone – with the exception of Greece and Cyprus – are also anticipated to return to growth. However, growth will still be dampened by necessary consolidation efforts, as well as by high levels of sovereign debt. In comparison to the rest of Europe, Germany is expected to post above-average growth of 1.7 percent in 2014 as it benefits from its good competiveness and strong export capacities against the background of the upswing in the global economy. Moreover, it is anticipated that investments will be supported by attractive financing conditions and are likely to grow by over 4 percent. The outlook for the construction industry is also favourable as revenues are anticipated to increase in this sector by 3.5 percent. Within this sector construction of new housing is expected to have the best outlook for growth and rise by 5 percent. According to estimates prepared by the Kiel Institute for the World Economy, the labour market should see the number of employed rise further. Unemployment figures should remain sta- ble as a portion of the rising number of employed persons stems from increasing immigration. Strong employment figures lead to rising inflows to the social insurance funds and higher reve- nues from taxes. As a result, the government is expected to post a budget that is almost balanced. The rate of inflation is antici- pated to be 1.7 percent and at about last year’s level. “The global economy should recover significantly in 2014. Economic experts anticipate Germany to post stronger growth in comparison to the rest of Europe.” The central banks’ monetary policy will again be the key factor influencing financial markets in 2014. The ECB, the Bank of Eng- land and the Bank of Japan are likely to continue their expan- sive interest rate policies and refrain from raising interest rates. The central banks’ course will be supported by the anticipated static level of low rates of inflation. The Fed announced in De- cember that it would begin to slowly exit from its extremely expansive monetary policy. The tapering of the Fed’s bond pur- chases should, however, take place flexibly and hinge on eco- nomic development. The market anticipates that the Fed’s bond purchasing programme will conclude at the end of 2014. In gen- eral, a moderate increase in long-term interest rates is expected to take place. A sharper rise in interest rates could also happen, and would lead to stronger reactions in the financial markets. Low issuing activities on the part of banks combined with very high investor demand will continue to keep spreads stable and low, especially for Pfandbriefe. We do not currently anticipate