066 Chap. 2 GROUP MANAGEMENT REPORT OUTLOOK Outlook Expectations for 2008 regarding the overall economy The crisis in the U.S. property market is expect- ed to lead to a considerable slowdown of growth in the United States in 2008. As a result of lower export demand, this could affect growth in the eurozone and Japan, too. Also due to the strength of the euro, for- eign trade will have a negative impact on eurozone growth and we therefore expect a growth rate of 1.5 percent for the current year. In Germany, growth is increasingly relying on domestic demand supported by a robust labour market. As a whole, overall economic growth is anticipated to be at eurozone level. Development in financial markets At the beginning of 2008, the development of financial markets is characterized by extreme uncer- tainty, which is largely attributable to a loss of confi- dence in shares of banks and financial institutions. As a result, buyers are massively reticent and therefore the fluctuations of share prices are much stronger than usual. Apart from the financial crisis started in 2007, fears of a recession in the U.S. are a crucial factor. Although we, too, foresee a noticeable slow- down of the economic cycle, in our opinion a durable and marked recession would appear to be improbable. Therefore we consider the recession fears, which stock markets have already priced in, to be exaggerated. Furthermore we proceed from the assumption that the direct consequences of the U.S. mortgage crisis have already been largely dealt with in the financial state- ments of banks. Neither do we expect the problems of some individual insurers covering subprime risks to lead to a breakdown of the market of municipal bonds in the U.S. Against this background we regard the develop- ment of stock markets of early this year as too pes- simistic and anticipate that by the end of the year the market will have reached substantially higher prices than the level at the end of January. Although the growth of earnings will presumably slow down outside the financial sector, it will still be soundly positive, all in all. At the beginning of the year 2008, bond-market yields will probably remain under pressure as a result of the credit crisis and the flight of investors towards safe investments. Yields will presumably also be kept down by worries about a recession in the U.S. In the course of the year, the strain on asset-backed securi- ties is expected to ease. Therefore a slight increase of the yield for 10-year government bonds would appear to be probable. Slight premium growth for the insurance industry In the year 2008, the growth of the insurance industry will remain at a rather low level and continue to lag far behind the development of the overall econo- my. Although the German Insurance Association (GDV) assumes that premium growth will slightly improve · The economic development in Germany has improved noticeably. However, there is still no major momentum to be expected for the German insurance industry. · For the AMB Generali Group, activities will continue to focus on sustainably strengthening profitability and corporate value. · On the basis of the developments planned in the individual business fields and our development focus we expect further increases in earnings.