The world’s economy was very weak in 2012. The economic downturn that began in the 2nd half of the previous year continued during the year under review. In many countries, the slowdown grew even worse as the year progressed. Overall, global economic output rose just 2.3 percent (previous year: 2.7 percent). The biggest drag on the economy was exerted by the crisis of sovereign debt and confidence in the eurozone: the precarious position of government budgets in several industrial countries acted as a continuous source of uncertainty on financial markets and slowed the investment activities of companies in the process. As a result, several countries in Western and Eastern Europe fell into recession or teetered on the brink of one during the reporting year.
The weak economy, combined with funding cuts initiated to stabilise government budgets, hurt the amount of income available to consumers and buying power. At the same time, unemployment in the European Union hit a record high, rising from an average of 9.6 percent in 2011 to 10.7 percent at the end of the reporting year. Consumer confidence fell in many countries as a result – from an already low level.
Overall, these developments also dampened economic development in the emerging countries of the world. Asian markets felt this slowdown as well, even if the region did manage to produce the strongest growth of all economic centres once again in 2012. But the emerging countries of Asia were unable to offset the weak economic performance of the world’s industrial countries.
In spite of the continuing downturn in the world’s economy, consumer prices produced relatively high gains once again in 2012. The driving force behind this increase was the renewed rise in the prices of energy and food, even though they did not hit the record levels seen at the beginning of 2011. In the wake of this high level, the increase of consumer prices eased only slightly during the reporting year. Overall, the inflation rate did finish the year below the level of the previous year. But in many countries, food prices climbed even higher in 2012 than they did in 2011. In emerging countries, where a large share of disposable income is used to buy food, this development posed a major problem for consumers.