Global macro-economic developments in 2007 were characterized by continued strong Asian growth and the US housing sector problems.

In 2007 the global economy expanded by 3.7%, down slightly from 3.9% in 2006. This global slowdown was largely caused by the US housing downturn. The effects of the housing crisis on the US economy were deeper and wider than previously anticipated. As a result US GDP growth slowed to 2.2%, down from 2.9% in 2006. Asian growth seemed unabated, with India and China showing record GDP growth of 8.6% and 11.4%, respectively. The Japanese economy went through a period of weakness, mainly caused by slowing consumer spending and much lower private capital investment in 2007. The Asian economy as a whole expanded by 5.6%. At 2.9%, the European economy grew faster than that of the United States and in line with 2006.

Global industrial production grew by a healthy 3.9% on average. The construction sector was suffering compared to the previous years, especially in the United States. Globally the construction sector managed to grow at the average rate of the last 25 years. The automotive sectors in the United States and Western Europe did not quite reach growth levels in line with the long-term trend levels. Growth in automotive was driven by the Asian and Eastern European markets. Pharma continued to grow at trend rate, with an ever increasing percentage of sales volume being derived from generics.

Commodity prices were at very high levels in 2007, with crude oil breaking USD 95 per barrel in November and the average crude oil price hovering around USD 72 per barrel.

Risks to the global economy are mainly weighted on the downside. The main driver is the declining US housing sector and the effects it has on consumer spending and on other parts of the global economy, such as the financial sector. The major upside is slanted towards a higher Asian growth. Europe is showing mixed signals for the coming year. With the US slowdown, slowing business investments and a high euro on the one hand and very low unemployment and robust consumer spending on the other, 2008 will be a year of moderate growth for Europe. There are currently no indications that we have seen the end of the high commodity prices.

According to Consensus Economics, global GDP is forecast to be 3.3%, while GDP growth in the United States will be 2.1%, in Europe 2.2% and in Asia 5.3%.