Siemens 2007 Annual Report Download - page 112

112 Management’s discussion and analysis
¢ In July 2007, we signed an agreement with Continental AG, Hanover, Germany, to
sell our entire SV activities. These business activities are reported in discontin-
ued operations for both the current and prior periods.
We further improved our business portfolio in fi scal 2007 through smaller
acquisitions and divestments. For a detailed discussion of our acquisitions, dis-
positions and discontinued operations, see “Notes to Consolidated Financial
Statements.”
Siemens operates in approximately 190 countries, making us one of the most
global companies in the world. In fi scal 2007, our business outside Germany
accounted for nearly €60 billion in revenues, representing 83% of total revenue.
In particular, we expanded our business in Europe and Asia-Pacifi c at more than
twice the rate of GDP growth in these regions. Revenue rose even faster in the
smaller Africa, Near and Middle East, Commonwealth of Independent States
region, which grew to account for nearly 10% of our revenues in fi scal 2007.
We support our competitive strategy with all our corporate resources, includ-
ing our Financing and Real Estate Groups and our Corporate Treasury which pro-
vide important capabilities for fi nancing and managing our assets. We also man-
age the capital structure in our balance sheet to ensure cost-effective access to the
capital we need for building our business and sustaining profi table growth that
creates value for shareholders.
Worldwide Economic Environment
According to estimates of Global Insight, Inc., gross domestic product (GDP) in
2007 is expected to grow 3.6% on a global basis. The decline compared to GDP
growth of 3.9% in 2006 is due to rising oil prices and higher interest rates among
other factors.
Europe is expected to experience a decline to 2.9% GDP growth in 2007 com-
pared to 3.2% in 2006. Within Europe, 2.7% GDP expansion is anticipated for the
Western Europe nations, down from 3.0% in 2006, as the cooler global economy
and a stronger euro combine to weigh on export growth. In Germany, the appreci-
ation of the euro and higher taxes are expected to slow GDP growth to 2.6% for the
year, down from 2.9% a year earlier. As in 2006, the economies of Central and East-
ern Europe are expected to grow faster than Europe overall, with aggregate GDP
growth of 6.1%. This represents a slight slowing from 6.3% in 2006.
In the Americas, GDP growth is expected to fall to 2.5% in 2007 from 3.2% in
2006, primarily because of a decline in U.S. economic growth from 2.9% in 2006 to
2.0% in 2007. Among the factors that are slowing growth of the U.S. economy are
downturns in real estate and housing construction, which are eroding consumer
spending as well as employment in construction and related industries and uncer-
tainty in fi nancial markets following large write-downs by major banks relating to
exposures to sub-prime mortgage. While strong global demand for raw materials
is expected to support GDP growth of 4.8% in Latin America, that level would still
represent a decline from 5.0% in 2006.