Please activate JavaScript!
Please install Adobe Flash Player, click here for download

Deutsche Telekom AG - Interim Group report - January 1 to September 30, 2011

8 This section provides additional information on and explains recent changes in the economic situation described in the combined management report for the 2010 financial year, focusing on global economic development in the first nine months of 2011, the regulatory environment and the currently prevailing economic risks, and the outlook. The overall economic outlook is subject to the precondition that there are no major unexpected occurrences in the forecast period. Global economic development. Although the global economy has continued to expand at a healthy rate in recent months, the pace of growth has slowed substantially. Countries all around the world have seen a substantial dip in business and consumer confidence as well as considerable volatility on the financial markets. This deterioration was primarily sparked by the worsening of the sovereign debt crises in Europe and the United States precipitated by the wrangling in Europe about a new bail-out package for Greece in July 2011 and the subsequent debates about an extension of the bail-out fund and by the first-time downgrading of the United States’ credit rating in August 2011. In addition, the capital markets suffered a massive loss of confidence in individual countries as a result of further rating downgrades of the European countries in crisis such as Greece, Portugal, and Ireland in the third quarter of 2011 and the downgrading of Spain and Italy. The situation is exacerbated by the threat that the European sovereign debt crisis will escalate into a banking crisis. These dampening effects are also impacting the economies of our footprint markets. Thanks to full order books, economic development in Germany in the third quarter of 2011 should maintain its upward trend for now. In the United States, on the other hand, the pace of growth appears to have decelerated further. The countries in our Europe segment still show a mixed pattern of economic development. Growth in Poland and Austria is robust, while moder- ate in the Czech Republic, the Netherlands, and Slovakia. In Hungary, Croatia, and Romania, the positive signs of a gradual upswing have turned into a slight downturn. Greece remains in the grip of a severe recession. Outlook. The major Western industrialized countries will see their economic develop- ment slow down markedly in the second half of 2011. While the emerging markets continue to record buoyant demand, this upward trend will lose further momentum. Overshadowed by the ongoing debt crisis and the possibility of a new bank- ing crisis, the forecasts for the global economy’s future development fluctuate widely. Governments, international organizations and economic researchers downgraded their forecasts in the course of 2011 considerably. The German government, for example, recently cut its economic forecast for Germany for 2012 from 1.8 percent to 1.0 percent. The OECD cut its forecast for 2012 for economic development in the euro zone from plus 2.0 percent to just plus 0.3 percent. The research institutes of the Joint Economic Forecast Project Group (Projekt- gruppe Gemeinschaftsdiagnose) in their 2011 Autumn Report revised and lowered their economic forecasts for the remaining months of 2011 and for 2012. Assuming successful implementation of the stability and growth pro- grams, a continued expansionary monetary policy, and the sustained fast pace of growth in the emerging markets, the Project Group in its 2011 Autumn Report is forecasting growth of 1.4 percent in 2011 and 1.3 percent in 2012 for advanced economies. Global economic output is expected to expand by 2.6 percent in 2011 and by 2.5 percent in 2012. Growth is only expected to amount to 1.6 percent in the United States next year. The Greek national economy is expected to shrink by 5.4 percent in 2011 and by 2.5 percent in 2012. Economic growth is expected to slow in 2012 relative to 2011 not only in Germany, but also in Poland, Austria, Slovakia and the Netherlands. Based on current general conditions, the Joint Economic Forecast Project Group (Projektgruppe Gemeinschaftsdiagnose) expects production in the national economies of Hungary, the Czech Republic and Romania to grow slightly. Overall economic risk. The main risks facing the global economy are an escalation of the sovereign debt crisis and its expansion into a global banking crisis and a resulting slow- down in global demand. Despite the concern about the budgets of EU Member States, it is possible that the German and European economy will develop better than expected in the coming months. So far, it has principally been economic sentiment indicators and the financial markets that have pointed to an economic downturn. Until recently, the real economic data was overwhelmingly positive. Interim Group management report. The economic environment.