The year 1999
The global economy recovered from the severe financial and economic crisis of the previous year more rapidly than anticipated displaying - in the words of the German Federal Bank's economic report - an "unexpectedly high degree of dynamism" in the second half of the year and recording an increase in global gross domestic product of 3.3 percent. In the Far East and South East Asia, a bundle of economic and fiscal policy measures gave rise to a further notably good rate of growth of 4.5 percent and a fall in the rate of inflation from 19 to 5 percent: loans from the International Currency Fund stabilised the affected currency systems and made it possible to develop banking systems less susceptible to crises. At the same time, numerous direct investments from abroad and packages of reforms aimed at overhauling the public budget in the affected countries helped to deregulate markets and to prevent outflows of capital.
With the German economy still suffering under the effects of the 1998 global crisis in the initial six months, some relief was provided by the healthy economy in the USA, the rapid recovery of the economies of South East Asia, the healthy condition of foreign business also bolstered by the devaluation of the euro, and a stable level of private consumption, making it possible for gross domestic product in 1999 to increase by 1.5 percent. The production sector had to combat a poor level of domestic demand, primarily for the products of the investment goods and textiles and clothing industries, and managed only weak growth of 0.7 percent. However, as a branch of industry with a high capacity for innovation, the chemicals industry did better than average, benefiting particularly from the recovery in the USA and the Far East and increasing its sales by 3.6 percent. Mechanical engineering did less well with sales falling by 0.1 percent. The primary negative factor here was the reluctance of companies to undertake investment in their machinery plants.