Economy continues to cloud over - HSH Nordbank’s outlook for the second half of 2008

Hamburg/Kiel, May 29, 2008 - The cyclical downturn is set to continue globally, according to a forecast by HSH Nordbank in its economic outlook for the second half of 2008. “The economic downturn is exacerbated by the impact of the U.S. housing market crisis, particularly in the United States and to some extent also in the euro zone,” said Dr. Bernhard Blohm, Chief Economist at HSH Nordbank. Indirect strain factors that exert a global effect have been triggered by the depreciation of the U.S. Dollar. Although a pronounced recession is being prevented in the U.S. through the export-stimulating impact of the weak dollar, economic growth until 2010 will remain below the potential of 2.5%, with 1.4% in 2008 and 1.7% in 2009. In the euro zone, too, growth is forecast at 1.5% in 2008 and 1.7% in 2009, i.e. below the figure of between 2% and 2.5%.

Blohm: “All told, growth in Germany will slightly outpace that of the euro zone. The potential has not been fully tapped, however.” The strong economic growth in the first quarter of 2008 was based on temporary special factors – the warm weather, an early Easter, the extra day in the leap year, and brought-forward capital spending for tax reasons. The chief economist of HSH Nordbank therefore thinks that a cooling-off in the second quarter is “very likely.”

The downturn in the U.S. and Europe is also leaving its traces on the economic region of Asia/China. Rising food prices have led to a substantial increase in inflation rates and will probably compel the central banks to tighten monetary policies. Although there are at present no signs of a downturn in China, “we forecast a modest downturn in growth due to the declining export momentum and tighter monetary policy – but this should be welcome,” according to Blohm. Emerging Asia remains the region with the highest growth. Growth outside China and India is expected to range between 4% and 6%.

HSH Nordbank AG is a strong regional bank in Northern Europe with total assets of € 205 billion. Some 4,800 of the bank’s employees provide corporate and high net-worth clients around the globe with premium bank products and services. In its core region of Hamburg and Schleswig-Holstein, it is the market leader in the corporate customer segment. HSH Nordbank is an acknowledged partner of the capital markets and international sector specialist. Its main focus is on transportation and real estate. In fact, HSH Nordbank is the world’s largest provider of ship finance and covers the entire value chain in the transportation segment. In the area of real estate, HSH Nordbank is one of the strongest banks in Germany, acting as a provider of services relating to all aspects of real estate.

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