（外脑精华·北京）经过4年的强劲增长之后，全球经济面临着严峻挑战：美国次贷危机导致的金融动荡、多国住宅市场的调整、创纪录油价和食品价格导致的全球通胀率高涨，以及美元贬值对美国以外国家的影响。

　　另一方面，全球经济中也存在一些积极因素。首先，凭借强劲的内需和稳固的经常项目盈余，新兴经济体构成了一项稳定因素。虽然我们不接受“脱钩论”，但当年危机迅速传染的局面也不会再现。

　　第二，近年来工业化经济体的企业支出非常谨慎。基于2001年衰退的经验，企业界一直保持着健康的财务状况。因此，不会出现2001/02年那种程度的财务重整。而且，企业盈利和内部现金流依然强劲，因此略有收紧的借贷条件不会造成当时那样严重的影响。

　　资本市场的估值水平似乎表明，市场关注的焦点已经不再是美国经济是否会陷入衰退，而是衰退的程度和持续时间。但我们认为，两年来美元的大幅贬值、美联储果断、及时的举措和1500亿美元的财政刺激措施将使美国经济免于陷入衰退。不过，到2009年，美国经济增速仍将低于其趋势增长率。而欧元区由于无法与美国经济脱钩，因此其2008年的增长率明显减缓。

　　在七国集团央行保持降息态势的情况下，债券收益率大幅上升的风险是有限的。考虑到总体通胀率将在年内回落，情况就更是如此。虽然企业盈利增速减缓，但股市回报率很可能将优于债市。

　　美国：减税人人有份，衰退能够避免

　　在刺激经济的问题上，美国政界的态度很少像现在这样一致。在总统大选初选趋于白热化之际，两党都不希望因反对经济刺激方案而为经济衰退承担责任。政府的财政刺激方案中的内容不仅包括对企业减税，更重要的是向居民发放总额约为1000亿美元的退税。这笔资金将以免税单的形式发放，和2001年的情况相似。2001年，美国政府共退税380亿美元，相当于全年GDP的0.4%，消费者在两个季度之中就花掉了这笔退税的三分之二。比较而言，今年临时退税的规模相当于2001年的2倍。鉴于此，我们关于2008年消费增长1.8%的预测是比较保守的。

　　这项刺激措施来得很及时。这一次，收入低微以及并不纳税的居民也可以获得退税。到2季度末，这些退税就可以用于消费。这就是说，其发挥作用的时候恰恰会是私人需求大幅下滑、储蓄率开始上升的时候。迄今为止，私人消费依然强劲，受房地产和金融危机的影响不大，2007年4季度还比上季度增长了2%。初看起来，这似乎令人吃惊，但其原因可以归于4季度相对稳定的劳动力市场。然而，2008年1月，非农业就业人数却下降了1.7万人，这是2003年以来的第一次。

　　财政刺激无助于解决储蓄率过低等结构性失衡问题。因此我们认为，美国经济虽能够避免陷入衰退，但其增速仍将明显低于2.5%－3%的趋势增长率。我们预计，美国2008年的经济增长率将为1.5%，而2009年充其量只能达到1.75%。由于财政刺激的作用，预计今年的私人消费将增长1.75%，但明年的增速将下滑到1.5%以下。另一方面，储蓄率将由2007年的0.5%升至2009年的2.75%。上述预测的前提假设是，就业人数年增幅将由2006年的2%和2007年的1.3%降至2008、2009年的每年0.5%，而失业率将由2007年的4.6%升至2009年的6%。基于2001年衰退的经验，美国企业界一直保持着健康的财务状况。因此，相比上世纪80、90年代和2001年的衰退，当前美国企业的准备要充分得多，劳动力市场的下滑不大可能比我们预测的情况更严重。

　　在我们对美国经济的预测中，最大的不确定因素在于住房部门以及次贷危机对美国消费的影响。从过去的走势看，我们预计，住房动工量很快就会达到谷底。然而，由于空置率远高于长期趋势水平，因此很难出现快速复苏。在2006年下滑4.6%、2007年下滑近17%之后，预计今年的住房投资还将下滑近14%，2009年也会有轻微下降。这种情况下，到2009年，住房投资对GDP的比率将下降到3.5%，从而大大低于长期趋势水平。

　　随着住房部门的衰退，下跌的房价和缩水的住房价值将对私人消费构成压力。此外，消费还会受到股市调整的打击。然而，这些财富效应会对消费造成多大影响的问题还没有定论。按我们的计算，资产每缩水1美元，美国的私人消费会下降2美分，这个数字只有IMF等估算值的一半。此外，美联储降息令抵押贷款再融资再次具备了吸引力，1月份再融资指数的高涨就说明了这一点。这直接降低了居民的利息负担。因此我们认为，私人消费不会出现大幅下滑。尽管如此，抵押贷款危机的影响仍将长期存在。

　　欧洲：难与减速的美国经济脱钩

　　近期，随着就业继续增加，欧元区经济增长保持了强劲势头。事实上，1月份的制造业采购经理指数还略有上升。然而，欧洲经济却难以持久、彻底地与美国经济脱钩。其原因在于，由于全球化的深化、信息通讯技术应用的推广，与上世纪80年代相比，大西洋两岸在外贸和金融市场两方面的关联都更加紧密了。美国经济减速可能会使欧元区经济增速减少约半个百分点，而欧元升值和油价居高不下也会抑制欧洲经济增长。鉴于这种情况，我们预计，欧元区的经济增速将由2007年的2.7%降至2008年的1.6%，2009年的增速将与2008年大体持平。

　　经过连续两年的罕见强劲增长之后，德国的经济增长率也将减缓。我们预计，2008、2009年的经济增速都将为1.5%，与潜在经济增长率大致相当。与近年来的情况相比，未来两年经济增长的基础将更加广泛。除了财政政策将发挥作用、而且就业将继续增长之外，私人消费也将回复增势，其增速将与GDP增速接近，这是6年以来的第一次。不过，鉴于消费者信心在2007年秋季达到高点后出现了急剧回落，我们关于储蓄率将下降、消费将增长的假设存在着相当的风险。

　　新兴市场：仍将保持出色表现

　　新兴市场的经济增长将继续领先于世界其他经济体，其金融市场很可能也会强于其他市场。当然，由于全球金融市场持续振荡、美国经济大幅减速，新兴市场的经济增速也将减缓，而且金融市场的回报水平会低于2007年。在这种意义上，新兴市场并未与世界其他经济体“脱钩”。然而，近年来，由于经济基本面（尤其是主权信贷质量）大为改善、中期经济增长前景良好，因此新兴市场对外部冲击的抗御能力明显增强了。

　　我们预计，2008－2009年，新兴经济体的经济增速将在6%－6.5%之间，比2007年下降约?个百分点。亚洲（除日本外）仍将是最有活力的地区，2008年的经济增速将为7.5%左右，其中中国和印度的增长率分别为10.5%和8.5%。其他新兴经济体之中，拉美的增速将为4%，而东欧、中东和非洲将在5.5%－6%之间。

　　在2007年的急剧上升之后，2008年新兴市场的通胀率将保持高位，但可能不会进一步加速了。虽然美联储大举放松，但新兴市场各央行仍然非常谨慎，不会轻易降息。在大多数国家，通胀率高涨的主要原因都在于食品和燃料价格飙升，中国的问题尤其突出。预计人民银行仍将保持强硬立场，但针对美国衰退的风险，将采取较温和的紧缩举措。在印度，印度储备银行在去年出色地避免了经济过热，2008年下半年很可能会开始降息。

　　汇率方面，人民币将加速升值，2008年对美元的升幅将达到7%－10%。美元疲软和国内通胀率高涨将促使许多新兴市场的央行接受一定程度的本币升值。但另一方面，干预汇市以保持本币竞争力的政策并不会改变，亚洲尤其如此。

　　通货膨胀：第二轮效应有限

　　以美元价格计算，2007年的油价上涨了近50%；由于农业歉收、新兴市场需求增长以及部分原料用于替代能源生产，基本食品原料的价格上涨了近40%。这种情况下，2007年12月，美国和欧元区的总体通胀率分别达到了4.1%和3.2%。2007年全年，美国的核心通胀率略有减速，降至2.4%，而欧元区的核心通胀率则有轻微上升，达到了1.9%。

　　我们预计，到2008年末，油价将回落到80美元/桶附近，从而对通胀产生轻微的抑制作用。然而，全年平均油价将比上年上涨近20%。食品价格方面，新兴市场的需求增长将持续下去，而美国和欧洲的播种情况表明，供给面不会出现迅速反应。多种软商品的库存水平都在逼近危险的低点，因此2008年的食品价格还将上涨4%－5%。

　　尽管如此，能源和食品价格高涨引发严重的二轮价格效应的可能性却很小。2007年3季度，欧元区工业部门的单位劳动力成本同比下降了0.6%，日本上升了2.1%，美国则基本保持稳定。由于周期性因素，未来几个季度的单位劳动力成本升速可能有所加快，但在生产转移的威胁下，工资的上涨是难以持续的。而且，新兴经济体的竞争仍然对可贸易品的价格保持着压力。2007年12月，欧元区非能源工业品的价格仅仅同比上涨了1.1%。去年夏季，消费者调查反映的短期价格预期有所上升，但近几个月已经回稳。另一方面，通胀挂钩债券所反映的长期通胀预期最近却几乎没有变化，即使是在联储两周内降息125个基点之后也是如此。

　　美国和欧盟的总体通胀率可能已经在岁末年初达到了高点。到今年年底，随着核心通胀率大体稳定在2%左右，总体通胀率也将回落到2%附近。不过，在秋季之前，欧元区的月度通胀率不会降至2.5%以下。因此，虽然经济疲软的迹象在增加，欧洲央行却难以降息。

　　经历了持续5年的经济上扬，日本仍处于轻度通缩之中。1998年以来，不计能源和食品价格的CPI指数从未出现过年度上涨。

　　货币政策：美联储大举降息，欧洲按兵不动，日本受制于通缩

　　自去年9月至今，美联储已降息225个基点。几乎没有人预计到，仅仅5个月之内，基准利率就会由5.25%降至3%。然而，美联储已经明确表示，非常时期需要非常举措：金融市场的严重动荡有可能导致经济混乱。抵押贷款违约率的猛涨就足以令人担忧了。

　　美联储无疑已经令人们相信，当前正是非常时期，基准利率还将进一步下调。我们目前预计，基准利率还将下调50个基点，从而降至2.5%；而且，目前2年期政府债券的收益率为2.1%，这意味着市场预期降息幅度会大于我们的预测。不过，在美国的通胀率超过4%、产能利用率处于高位、而且联储的举措可能加剧金融市场中的道德风险的情况下，这些举措是否必要、是否适当，现在还难以判断。

　　与美联储相比，欧洲央行则处于另一个极端。欧洲央行一直没有降息，而且其行长理事会的许多成员都否认将在近期降息。当然，欧洲央行有充足的理由按兵不动：通胀率仍居高不下，失业率继续下降，欧元坚挺未能抑制制造业产能利用率的高涨，而且欧元区银行受次贷危机的影响远小于美国银行受到的影响。欧洲央行似乎在说：“危机？哪有什么危机？”

　　然而，当前的局面是有先例的：1997/98年、2001/02年，欧洲的利率都曾追随美国利率的走势，只是存在一定时滞。传统的传导机制仍在发挥作用：先是世界股市下跌，而后全球信心下降，此后欧元区对美国和其他地区的出口将受到沉重打击。因此，一定时期之后，欧元区劳动力市场将陷入疲软，产能利用率将下降，通胀压力将缓解，而欧洲央行最终也会小幅降息。这个过程花费的时间还不清楚，但到2008年下半年，欧洲央行的基准再融资利率应会降至3.5%。

　　相比之下，日本央行的问题完全是另一回事。虽然其GDP保持了5年的强劲增长，而且日元疲软，但日本央行却无法将利率升至0.5%以上。在无法摆脱通货紧缩的情况下，日本的利率也无法恢复正常水平。

　　全球股市：调整之后上涨空间明显

　　2008年初，全球股市大幅下跌，原因在于多重负面因素的影响：经济周期方面的坏消息、企业盈利的警报以及金融业的问题。未来几个月中，关于企业盈利的主流预期很可能会进一步下调，而且其范围不会仅限于金融业。利润保持两位数增长的时代已经过去了。从经济理论和长期经验来看也是如此：长期之中，企业利润增速不会超过名义GDP增长率；如果回报率大大高于名义GDP增速，其代价就是风险大增。

　　不过，即使企业利润增速低于当前主流预期，由于近期的股市大调整，股票的盈利收益（即市盈率的倒数）也达到了罕见的高位。与债券收益率相比，股票盈利收益之高就更显突出。因此，我们认为，在当前极度不确定的局面结束后，股市存在明显的上涨空间。

　　英文原文：

After four years of above-average growth the global economy is facing substantial challenges: financial distress caused by the fallout of the US subprime crisis, the correction in a number of residential property markets, the surge in global headline inflation driven by record oil and food prices plus - outside the US - the effects of the declining USD.

The US slowdown will subtract about half a percentage point from European growth and higher oil prices might take away another 1/4 of a percentage point. These numbers are the result of model simulations, which obviously cannot pick up the financial ramifications of the current subprime crisis.

Some positive factors need to be taken into account. First, the emerging markets - contrary to previous shocks - are providing an element of stabilisation due to robust domestic demand and solid current account surpluses in many cases. While we are no buyer of the decoupling story, the rather modest widening of the EMBI spread and the stability of EM currencies do not point towards the old contagion story, either.

A second plus is that corporate spending in the industrialised world has been rather cautious in recent years. There is no need for the extent of balance sheet consolidation we suffered in 2001/02. In addition, profits and internal cash flows are still strong, so that somewhat tighter lending conditions should not have the same detrimental effect as in the last downturn.

We predict that the substantial USD depreciation of the last two years, decisive and timely Fed action and the USD 150 bn fiscal package will prevent a US recession. But even in 2009 US growth will remain below potential. Since we do not believe in decoupling, Euroland growth will slow to 1 3/4%, German GDP to 1 1/2% in 2008.

With G7 central banks remaining in cutting mode, the risk of a substantial increase in bond yields is limited, especially because headline inflation rates will come down in the course of the year. Despite slower profit growth, equities are likely to do better than bonds.

The R-word is doing the rounds

The global economy is in a difficult situation. Economic growth virtually came to a standstill in the US in Q4 2007 and already passed the top of the cycle in the euro area around the end of 2006. In Japan, too, the outlook is worsening.

After real GDP rose by an annualised 4.9% （compared to the previous quarter） in the US in Q3, it increased by a measly 0.6% in Q4. The reason is the deep-seated recession in the American housing sector. The contraction of the market there, which had already been underway for over 2 years, recently became even more acute as a result of the deepening financial crisis. Housing starts in December 2007, at a little over 1 million units （annualised）, were almost 40% down on their year-earlier level and around 56% lower than their peak in early 2006. Capital market valuations seem to indicate that the question is no longer whether there will be a US recession but rather how deep it will be and how long it will last. We, however, believe that a US recession will be avoided. Our argumentation is based on the expansionary monetary policy of the Fed and the government's fiscal stimulus package running to over USD 150 billion or slightly more than 1% of GDP. The Fed has cut its Fed funds target rate by 225 bp since mid-September 2007 （125 bp within one week in late January） to 3% most recently and is likely to reduce it by a further 50 bp in March.

USA: Tax cheques for everyone...

Seldom has there been such unanimity among American politicians regarding stimulus for the economy. As the presidential primary races shift into top gear no party wants to risk putting itself in a position where it can be blamed for the recession by opposing the package. The stimulus package contains not only tax breaks for companies but above all tax rebates for US households worth around USD 100 bn, which will be disbursed in the form of tax cheques - as was the case in 2001. In 2001 the US government sent out cheques worth USD 38 bn - equivalent to 0.4% of GDP - of which two-thirds were spent within two quarters. This year's temporary tax rebate is thus twice the volume of the 2001 package. Against this background our consumption forecast of 1.8% in 2008 is on the conservative side. Going by the experience in 2001, the stimuli could well turn out to have a greater impact. For example, a taxpayer can expect to receive a tax cheque of up to USD 600, while a couple with two children can look forward to receiving USD 1,800.

Such a package is well timed. The tax cheques that are this time also to be given to households with only small incomes and which do not pay tax could already be spent by the end of Q2, i.e. take effect at the very moment when a significant weakening of private demand and an increase in the savings ratio can be expected as a result of negative wealth effects and declining mortgage cash-outs as a result of shrinking housing prices. To date, private consumption has remained robust and relatively untouched by the fallout from the real estate and financial crises, and rose even in Q4 by 2% versus the preceding quarter. This does seem astonishing at first glance, but it can be explained by the still relatively stable labour market in Q4. However, at 17,000, non-farm payrolls fell in January for the first time since 2003.

... growth still well below potential in 2008 and 2009

The fiscal package is not the appropriate means of solving structural imbalances, such as the extremely low savings ratio. We therefore expect that the US economy will be able to avoid slipping into recession, but that growth will nevertheless remain a long way below potential, which we estimate at 2 ? to 3%. After an average growth rate of 1 ?% for 2008 we forecast GDP growth of 1 ?% at best in 2009 （see chart 5）. Private consumption is likely to grow 1 ?% in the current year mainly for fiscal reasons, declining, however, to below 1 1/2% in the coming year, while the savings ratio climbs from 0.5% in 2007 to 2 3/4% in 2009. This is based on the assumption that employment increases by just about 1/2% each year in 2008 and 2009, compared with nearly 2% in 2006 and 1.3% in 2007, and that the unemployment rate rises towards 6% in 2009 compared with an annual average of 4.6% in 2007. A sharper slump in the labour market appears unlikely as US companies repeatedly cited the 2001 recession as a reason for consolidation and are currently far better equipped for a downturn than in the weak phases of the 1980s, 1990s and 2001.

Recession in housing: Nadir will soon be reached

The biggest imponderables in our US economic forecast lie in the housing sector and the impact of the subprime crisis on US consumption. Looking at past developments, we assume that the nadir for housing starts will soon be reached. At present, construction is being started on around 1 million dwellings per month. In the three months around the lows of 1982 and 1991 the average figures were between 875,000 and 900,000. A rapid recovery is, however, unlikely given that vacancy rates are far higher than the long-term trend. The correction could even take several years. Correspondingly, housing investment is likely to contract by nearly 14% in the current year, after falling 4.6% in 2006 and nearly 17% in 2007, and will remain slightly negative in 2009 as well. Relative to GDP, housing investments would thus drop to 3 ?% in 2009 and thereby fall considerably below the long-term trend, which however would correspond with earlier development patterns （see chart 6）.

The biggest imponderables in our US economic forecast lie in the housing sector and the impact of the subprime crisis on US consumption. Looking at past developments, we assume that the nadir for housing starts will soon be reached. At present, construction is being started on around 1 million dwellings per month. In the three months around the lows of 1982 and 1991 the average figures were between 875,000 and 900,000. A rapid recovery is, however, unlikely given that vacancy rates are far higher than the long-term trend. The correction could even take several years. Correspondingly, housing investment is likely to contract by nearly 14% in the current year, after falling 4.6% in 2006 and nearly 17% in 2007, and will remain slightly negative in 2009 as well. Relative to GDP, housing investments would thus drop to 3 ?% in 2009 and thereby fall considerably below the long-term trend, which however would correspond with earlier development patterns （see chart 6）.

Wealth effect probably smaller than presumed

The recession in the housing sector weighs on private consumption via falling house prices and thus shrinking asset values. On top of this, losses are suffered from corrections in the equity market. How much these wealth effects actually dampen private consumption is open to question, however. According to our calculations, the wealth effect on US private consumption of 2 cents per dollar of asset loss is possibly only half as much as estimated by the IMF and other institutions. In addition, the Fed's rate cuts have made the refinancing of mortgages attractive once again, as shown by the jump in the refinancing index in January. This reduces the household's interest burden directly. In addition, the rate cuts have also appreciably reduced the increase in burdens from mortgages with a low initial interest rate that is adjusted after 1-2 years to match market developments. For this reason we do not expect a massive slump in private consumption. However, the effects of the mortgage crisis will continue to reverberate for a long time – albeit with a muted impact following the key rate cuts – and the default rates particularly in the subprime segment will continue to rise for a while. Most interest rate adjustments should be in place by H2 2009 （see chart 7）.

Europe cannot decouple from US downswing

Euro-area growth has remained robust of late with employment continuing to increase; in fact, the purchasing managers' index in manufacturing rose slightly in January. Nevertheless, the European economy is scarcely likely to be able to decouple completely from the US economy on a permanent basis. The reason is that ongoing globalisation and the increasing use of information and communication technologies have resulted in closer transatlantic links in external trade and financial markets than in the 1980s. The growth slump in the US could restrain growth in the euro area by roughly one-half of a percentage point, with the effect being reinforced by the strong euro and stubbornly high oil prices. Against this backdrop we expect euro-area growth to slow in the current year, from 2.7% to merely 1.6%, and continue at a similarly moderate pace in 2009 （see chart 8）.

Germany: Consumption becoming a pillar of growth

After two years of unusually strong growth （real GDP up 2.9% in 2006 and 2.5% in 2007） the economic expansion in Germany is also set to ease. However, our forecast of 1.5% growth for both 2008 and 2009 puts it roughly in line with potential. That growth is more broadly based than in past years. As long as fiscal policy plays along and employment continues to increase, albeit at a somewhat slower pace （?% in 2008 after 1.7% in 2007）, private consumption should start to expand again at about the same rate as GDP for the first time in 6 years, as chart 10 illustrates. However, considering that consumer confidence has fallen sharply since its last high in autumn 2007, there are substantial risks attached to our assumption of a decrease in the savings ratio and thus in the degree to which consumption will grow in 2008.

Export and investment activity losing steam

On a contrasting note, the current drivers of growth, i.e. capital spending and net exports, are weakening noticeably. The strong euro and the sagging growth in the US are weighing on German net exports, whereas demand - at least from the euro area and the oil-exporting nations （Russia, in particular） – has remained relatively vigorous. All in all, real export growth is likely to ease in 2008, from over 8% to just over 5%. This and the pull-forward effects that emerged for tax reasons in 2007 will curb investment activity in 2008. We therefore expect investment in machinery and equipment to climb by only 5% in 2008, down from 8.4% in 2007. Moreover, the expansion in construction investment that started in late 2006 will fizzle out. Given the substantial decline in order intake, investment in construction will probably contract by 2 ?% in 2008 after having expanded by 2% in 2007, meaning investment activity will be more or less flat in 2008 （+ 1 ?%, down from 4.9% in 2007）.

Emerging markets: Superior performance to continue

The emerging markets （EMs） will continue to outperform the rest of the world in terms of economic growth and likely with respect to financial markets as well. To be sure, due to the ongoing global market turmoil and sharp slowdown in the US economy, EM growth will be lower and financial market returns smaller than in 2007. In this sense, EMs have not "decoupled" from the rest of the world. But EM resilience to external shocks has significantly increased in recent years, due to much improved fundamental conditions （especially sovereign credit quality） and favourable medium-term growth prospects.

We expect emerging market economies to grow at 6% to 6.5% in 2008-2009, a drop of approximately ? pp from 2007. Asia （without Japan） will remain the most dynamic region, growing at roughly 7.5% in 2008, powered by China （10.5%） and India （8.5%）. GDP growth in other regions will range from 4% （Latin America） to 5.5%-6% （Eastern Europe, Middle East and Africa） （see chart 12）.

Inflation will not accelerate

After a sharp pick-up in 2007, inflation will remain high but probably not accelerate further this year. EM central banks remain very cautious and will be wary of starting to cut interest rates too soon, despite the aggressive easing in US monetary policy. In most countries, the pick-up in inflation has been due to sharp increases in food and fuel prices. This problem has been particularly acute in China. The PBOC is expected to remain hawkish but to resort to more moderate tightening with an eye on US recession risks. In India, the RBI did a good job in avoiding overheating last year, and is likely to start cutting rates in H2 2008. Elsewhere, inflation remains a significant problem in Argentina and Venezuela, due primarily to inconsistent domestic policies.

EMs as a whole will continue to accumulate external assets, but some countries remain vulnerable. Against the background of an aggregate EM current account surplus and high expected net capital inflows, emerging market countries will continue to accumulate official FX reserves （see chart 13） and probably other （unrecorded） external assets. The stock of EM external debt is expected to grow at a moderate pace, driven mostly by non-sovereign issuers. Therefore, in net terms, EMs will remain external creditors and thus well equipped to deal with external financing shocks. While this is true for the aggregate EM, some countries are quite vulnerable to deteriorating international liquidity conditions, in particular the Baltics, Romania, Bulgaria and Ukraine, as well as South Africa and Turkey. These countries exhibit large and in some cases growing current account deficits financed in part by volatile foreign portfolio inflows. In a context of high risk aversion by international investors, the probability of financial turbulence in these countries has materially increased.

Renminbi appreciation is set to accelerate. The Chinese RMB is likely to appreciate by 7%-10% vs the USD in 2008 （see chart 14）. A weak USD and high domestic inflation will lead many EM central banks to accept somewhat stronger currencies. At the same time, the policy of keeping currencies "competitive" via FX intervention will remain unchanged, especially in Asia.

Inflation: Limited second-round effects

In the course of 2007 oil prices increased by close to 50% in USD terms. Prices for basic food stuff rose by close to 40% in the same period, due to poor harvests, increasing demand from emerging markets and the usage as an alternative source of energy. As a result, headline inflation reached 4.1% in the US, and 3.2% in the euro area in December. While in the US core inflation actually decelerated slightly during the course of 2007, to 2.4%, it inched up very gradually to 1.9% in EMU.

We assume that oil prices will decline towards USD 80/bbl by end-2008, having a slightly dampening effect on inflation. Still, the annual average will be up by close to 20% on the year. With regards to food prices, demand growth from emerging markets - due to rising incomes and the shift to a more protein-rich diet - will persist and, at least in the US and Europe, the sowings for 2008 do not indicate a rapid supply-side response. Inventory levels for several soft commodities are reaching critical lows so that food prices could rise by 4-5% in 2008.

However, the risk that higher energy and food prices will trigger substantial second-round effects is rather small. Unit labour costs in industry were -0.6% yoy in EMU, -2.1% in Japan and stagnant in the US in Q3 2007 （see chart 16）. For cyclical reasons, unit labour costs might rise somewhat faster in the next few quarters, but there is little evidence that wage inflation will perpetuate itself, as the relocation threat continues to put a lid on wage increases in many industries. In addition, competition from the emerging markets continues to put pressure on prices of traded goods. In EMU the prices for non-energy industrial goods have been up a meagre 1.1% yoy in December. Short-term price expectations collected in consumer surveys rose last summer but have stabilised in recent months. But long-term inflation expectations derived from index-linked bonds have barely budged of late, even after the Fed’s whopping 125 bp rate reductions within 2 weeks （see chart 17）.

In the US and EMU headline inflation probably peaked around the turn of the year. With core inflation more or less stable at around 2%, headline inflation will recede to 2% by year-end in both regions. In EMU, however, monthly inflation rates will not fall below 2 1/2% before autumn, making it hard for the ECB to cut rates despite increasing signs of economic weakness.

Japan remains stuck in a mild deflation even after five years of economic upswing. The CPI excluding energy and food has not seen an annual increase since 1998.

A very active Federal Reserve...

Up to now the Fed has lowered interest rates by 225 basis points since September. Almost nobody expected interest rates to fall from 5.25% to 3% within just five months. However, the Fed is making clear that unusual times require unusual action: severe financial market disruptions may lead to nonlinearities in the economy. The sharp rise in mortgage delinquencies gives plenty of reason to worry （see chart 18）.

The Fed has certainly convinced everybody that times are unusual and that it is set to reduce rates further. DBR currently expects another 50 basis points to 2.5% and 2-year government bond yields of 2.1% point to the market expecting even more. But the jury is still out on whether these moves were really necessary and appropriate in an economy operating near capacity with inflation rates above 4% and the risk of introducing more moral hazard in financial markets （the “Bernanke put” at work）.

Still, the US unemployment rate of 4.9% in January （up 0.3 pp from a year ago, although down from December） and the massive amount of bad news from the financial sector indicate that preemptive action is appropriate. And this action may have to be even more pronounced this time because the financial turbocharger through the real estate sector is cut off this time. The Fed can undo its rate cuts if it turns out that bank lending will not be reduced as banks rebuild their balance sheets. But it will take several months before we will know.

Still, the US unemployment rate of 4.9% in January （up 0.3 pp from a year ago, although down from December） and the massive amount of bad news from the financial sector indicate that preemptive action is appropriate. And this action may have to be even more pronounced this time because the financial turbocharger through the real estate sector is cut off this time. The Fed can undo its rate cuts if it turns out that bank lending will not be reduced as banks rebuild their balance sheets. But it will take several months before we will know.

… and a more passive ECB （and BoJ）

The European Central Bank is the polar opposite to the Federal Reserve. It has not reduced rates so far and many members of its Governing Council reject the idea that they will do so any time soon.

Granted, there are some good reasons for holding back: CPI inflation is stubbornly high, unemployment continues to fall （chart 19）, the euro-area manufacturing sector operates well above capacity despite the strong euro （chart 20） and euro-area banks are much less affected by the subprime crisis than their US counterparts. The ECB seems to say: "Crisis? What crisis?"

However, we have seen much of this before for example in 1997/98 and in 2001/02 when rates in Europe followed those in the US with a lag. The usual transmission mechanisms are still functioning: equity markets are down around the world, confidence is declining globally and euro-area exports to the US and elsewhere will be hit hard. Therefore, with a lag the euro-area labour market will weaken, capacity usage will come down （see chart 20）, inflation pressures will ease – and the ECB will eventually also reduce rates a little. How long this will all take is not clear, but in the second half of 2008 the ECB's main refinancing rate should have reached 3.5%.

The Bank of Japan is yet another issue altogether. It has been unable to raise rates above 0.5% despite five years of solid real GDP growth and a weakening currency. The process of rate normalisation will not resume for the time being as inflation is unlikely to come back in Japan when the world economy is weakening and the yen strengthened to 106 per USD.

Warning signals from yield curves

Yield curves are giving an indication of how serious markets are taking the current problems. 10-year yields were below 3-month rates, both in the US and in Germany, inverted for the first time since early 2001 - and we know what ensued back then. The Fed is trying hard to engineer a positively sloping yield curve again and succeeded with the cut to 3% in late January. The euro-area yield curve is likely to stay inverted until the ECB cuts rates because we do not expect much of an upward move of long-term yields.

Bond yields may stay unusually low for a while longer

Government bond yields have plunged around the world. US 10- year yields fell from more than 5% in June to just 3 1/2% in late January, reflecting the Fed moves. Yields may stay this low for some more months, but using macroeconomic valuation models, they should rise again in the medium term. As chart 23 shows, bond yields move with nominal GDP growth over time, with yields smoothing over cyclical fluctuations in GDP. Since we expect US growth to reach around 4 1/2% in the medium term, yield forecasts are in a similar ballpark. This model helped us not wonder too much about why US yields did not rise much above 5% at the peak of the latest rate cycle, as we did not expect GDP growth to stay above 6% （the “Greenspan conundrum”）.

German 10-year yields are more stable and the long-term level is set to be somewhat lower than in the USA because of lower trend growth. Therefore, they will probably not rise very much in 2008 from their current level of around 4%.

Equity markets look cheap even as profits fall

Global equity markets fell sharply in early 2008 as a number of negative factors combined: bad news about the business cycle, profit warnings and financial sector problems. Indeed, consensus expectations for corporate profits are likely to get revised downward further over the coming months - and not only for financials. The times of double-digit increases in profits are over, which is in line with economic theory and long-term observations: in the long run profits do not rise faster than nominal GDP and rates of return well in excess of nominal GDP growth can only be achieved at the price of high risk.

Even if profits turn out lower than the consensus expects today, the earnings yield on equities （inverse of the P/E ratio） is unusually high following this year’s market correction （chart 24）. This is reflecting high hurdle rates by many companies and investors. Fixed investment is accordingly soft. And this earnings yield looks particularly high when compared to bond yields at the moment. Therefore, we see clear upside potential for equities when the current period of extreme uncertainty ends.

Currencies may have gone far enough

Since early 2001 the dominant movements of G3 currencies have been upward for the euro, down for the dollar and down even more for the yen. Based on real trade-weighted exchange rates, these moves have now taken currencies in territory that has often seen stabilisations （chart 25）. Our expectations for the main exchange rates are to stay around current levels until year-end 2008.