Outlook for the economy

Market situation in October 2008

The world economy is in a downturn. Economic growth is being slowed by tightened crediting policies and high interest rates following the financial crisis, among other things. At the beginning of October, the IMF estimated the euro area's GDP to increase by 1.3% in 2008 and by 0.2% in 2009. A gradual recovery is estimated to begin at the end of 2009.

According to Nordic building industry associations, the number of housing investments will decrease this year in all Nordic countries, and remain at a low level next year. Other construction investments will decrease more significantly in 2009. House renovation activity and energy saving investments will experience steady growth. Market conditions in civil engineering remain positive.

In October, the IMF projected real growth in Russia to amount to 7% this year, slowing down to 5.5% in 2009. Housing construction increased by a mere 5% on the year before in January-August. In recent months, the increase in housing prices has cooled down and in some areas prices have started to decrease. Economic growth in the Baltic countries weakened considerably during the first two quarters. Next year the average growth in the Baltic countries as a whole is estimated to be negative.

In Germany and Austria, the economic growth will be approximately 2% this year, but will barely be positive in 2009. In Central Eastern European countries growth estimates are still clearly positive, but the account deficits and the European downturn already weaken the economic development.

Updated November 3, 2008
InvestorRelations@yit.fi