The international financial and economic crisis depressed worldwide passenger vehicle demand in fiscal year 2008. Despite this difficult environment, the Volkswagen Group was able to increase the number of vehicles delivered compared with the previous year.
International financial crisis leads to worldwide economic downturn
The global economy continued growing until mid-2008. However, the subsequent dramatic worsening of the international financial crisis led to recessionary trends in the major industrial countries and to a marked decline in the pace of economic growth in the emerging economies. Inflation rates, which had risen worldwide until then, cooled due to the considerable decrease in commodity and energy prices. In total, global economic growth was only around 1.7%, compared with 3.5% in 2007.
EXCHANGE RATE MOVEMENTS FROM DECEMBER 2007 TO DECEMBER 2008
Index is based on month-end rates, December 31, 2007 = 100
In the United States, economic growth slowed to 1.3% from 2.0% in the previous year. Despite generous support measures targeted at the banking and housing sectors, negative growth could not be prevented in the second half of the year. The US dollar recovered substantial ground against the euro after hitting a low in July. Canada’s gross domestic product (GDP) only grew by 0.6% (previous year: 2.7%). Mexican economic expansion slowed from 3.2% to 1.5%.
South America/South Africa
In the two largest South American countries, Brazil and Argentina, the economy continued to grow at a fast pace in the first three quarters. In the fourth quarter, the pace of economic growth decelerated substantially. Nonetheless, Brazil still recorded somewhat higher growth, at 5.7% in 2008 as a whole (previous year: 5.4%). The Argentinian economy grew at a rate of 6.2% compared with 8.7% in 2007. In South Africa, problems in the energy sector, among other factors, led to a decline in economic expansion there from 5.1% to 3.1%.
Economic growth in the Asian emerging markets also slowed considerably during 2008, particularly due to deteriorating export prospects. However, the Chinese economy saw continued substantial growth of 9.0% (previous year: 13.0%). Despite the long-term weakness of the yen and the very low interest and inflation rates in Japan, the economy there contracted by 0.4% (previous year: growth of 2.4%). India continued its strong economic expansion with a growth rate of 7.0% (previous year: 9.0%).
Percentage change in GDP
In Western Europe, growth fell sharply in the last two quarters of 2008. Many countries experienced recessionary trends. On average, GDP rose by 0.9% (previous year: 2.7%). The unemployment rate in the euro zone dropped to a record low of 7.2% early in the reporting period, but rose again to 8.0% by the end of the year. By mid-year, the euro had hit new highs against the US dollar and the yen, but in the second half of the year lost considerable ground against both currencies. In Central and Eastern Europe, economic growth slackened considerably in the second half of the year, but still remained robust at 4.6% (previous year: 6.4%).
The pace of economic growth in Germany slowed to 1.3% from 2.5% in 2007. Despite the high-flying euro, the main impetus for this growth continued to come from exports and capital spending, whereas consumer spending remained weak due to decreasing purchasing power and rising economic uncertainty. The positive performance of the labor market was unable to change this trend. In October 2008, unemployment fell below the three-million mark for the first time in 16 years.