Geschäftsbericht 2015, englisch - Economic report

münchener Hypothekenbank eg | annual report 2015 management report 12 Overall Economic Conditions Economic Development The global economy weakened slightly in 2015. Based on an initial assessment prepared by the International Monetary Fund (IMF), global gross domestic product (GDP) grew by 3.1 percent follow- ing 3.4 percent recorded in the previous year. Results were mainly dampened by economic development in the emerging markets, and especially in China. Furthermore, global trade weakened notably. In the industrialised nations, a moderate upswing gained further traction. This was also visible in the eurozone where the IMF re- corded growth of 1.5 percent, which was primarily driven by domestic demand, as well as rising exports due to the declining value of the euro. The German economy was robust in 2015 as the country’s GDP grew by 1.7 percent, which was slightly higher than in the previ- ous year. The domestic economy was the also strongest growth driver in Germany with private consumption playing a particu- larly active role. Investments contributed favourably to growth with capital expenditures for plant and equipment at the fore- front. Investments in construction projects were only able to record marginal growth and rose by a total of 0.3 percent. This increase was solely driven by investments in residential construction, which grew by 1.6 percent. Construction in the public sector fell by 1.7 per- cent while construction of commercial property projects contracted by 1.4 percent. The construction industry viewed an insufficient backlog of orders as the primary reason for the decline. Consumer prices once again rose at a significantly slower pace: the gain of 0.3 percent was the lowest rate of price increases in six years. This situation was primarily influenced by declining global market prices for oil as well as falling prices for natural gas and energy. In contrast, prices for food and services rose. The stable economy also had a favourable influence on the labour market. The annual average number of employed persons rose to more than 43 million for the first time ever. The number of unem- ployed persons fell by 100,000 to just below 2.8 million pushing the unemployment rate down by 0.3 percentage points to 6.4 percent. Financial Markets Financial markets were once again volatile in 2015. The markets were upset by the decision taken by the Swiss National Bank at the start of the year to discontinue the pegging of the Swiss Franc at a fixed exchange rate to the euro. The move led to a rapid rise in the value of the Swiss franc over the euro as it soared by about 20 percent. During the first half of the year the crisis surrounding Greece worsened again and led to increasing fears of a national bankruptcy and that Greece would leave the eurozone. These fears were alleviated following numerous negotiating sessions as the Greek government agreed to make concrete reforms in return for financial assistance. Bond markets were heavily influenced by the European Central Bank’s (ECB) ultra-loose monetary policy. The ECB already an- nounced in January that it was expanding its bond purchasing programme, which began in March. This again led to notable profits in government bond spreads, which in turn pushed bond yields down sharply as 10-year Bunds posted a record low yield of 0.05 percent in April. This was followed by a counter-reaction which pushed yields back up to over 1.0 percent by the beginning of June. This move marked the highest yields for the year as they retreated over remainder of 2015. At the end of the year 10-year Bunds were yielding 0.6 percent. “The Pfandbrief continued to set the standard in Europe. German issuers accounted for the greatest share of euro- denominated benchmark issues.” Following seven years of zero interest policy the American central bank (the Fed) raised its key interest rate to the range of 0.25 per- cent to 0.50 percent in December 2015. The market had long spec- ulated that this move was coming as the Fed had previously sent out numerous signals. In contrast, the ECB did not change its expansive monetary policy and in December responded to un- changing low inflation rates with another reduction in the deposit facility rate by 0.1 percentage points to minus 0.3 percent. management Report 2015 Economic ReporT

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