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Macroeconomics

On this website, Deutsche Bank Research offers you analyses of the German and the global economy as well as developments in national and international financial markets. We provide macroeconomic and financial market forecasts and conduct research on structural and long-term issues.

249 (61-70)
August 22, 2016
Region:
The debate about whether a negative interest rate policy (NIRP) helps or hinders the transmission mechanism of monetary policy continues to rage. The BIS and many others – including us* – long ago issued warnings about throwing open the monetary floodgates and the side effects of negative central-bank interest rates, and now Mark Carney, the governor of the Bank of England, has also clearly rejected negative interest rates, despite using all the means at his disposal to prevent the UK economy from sliding into recession after the Brexit shock. The package of measures he launched in August significantly exceeded market expectations, but Carney has ruled out negative interest rates, referring to the adverse impact on the capital markets. [more]
61
July 27, 2016
Region:
There is a high level of excess demand in the housing market and it has grown in recent years. Demand for credit is also growing at a correspondingly rapid pace. The supply of credit could be boosted by further monetary stimulus. In the medium term, more buoyant lending is likely to increase interest rate risk. However, if lending growth remains low, there will be increased risk of overvaluations and a house price bubble. This is particularly true when little new housing is financed and lending is largely for existing property. Given the high level of excess demand in the housing market and the fact that office buildings are being converted to residential buildings, office space is also likely to be in short supply in the coming years. As a result, rents in the office market can be expected to rise more strongly, and could – for a time – outstrip the rise in rents in the housing market. Since Chancellor Merkel assumed office in 2005 her term has been dominated by crisis management, which often required leadership and moderation of differing interests in Europe. Managing the UK’s departure from the EU will have top priority for the time being. Nonetheless, Merkel is likely to focus her attention on domestic topics as much as on European ones in the upcoming months given the looming federal elections in autumn 2017. Also in this issue: Fewer insolvencies in German industry. [more]
62
July 21, 2016
Region:
Analyst:
The 2008/2009 economic and financial crisis caused the number of insolvency proceedings instituted to increase by 48% in 2009 alone. However, the number of insolvencies has been following a downward trend since then. As a result, fewer proceedings were instituted in 2015 than in 2008 across nearly all sectors of industry. The prospects for this trend continuing in 2016 are good. Over the past few years, the number of insolvencies in any given industry has been significantly influenced by the prevailing economic conditions in that industry and – related to this – the value of the euro against the currencies of major trading partners. [more]
63
July 6, 2016
Region:
Breathtaking. No other word really does justice to the profound changes unleashed by digitalisation and the accelerating pace at which new technologies are appearing. Of course, many of these technologies are still in their infancy and in some cases still have a rather visionary character, but they nevertheless hold unforeseen and lucrative potential. The race for digital technologies and successful monetisation strategies has been on for some time, especially among the large, well-known internet platforms. However, start-ups are increasingly throwing their hat into the ring and causing quite a stir among the business models of established companies. As a result, many innovation-stimulating digital technologies are gradually finding their way into traditional companies where they are evolving into a comparative competitive advantage (not only) for Germany as a business location. [more]
65
July 4, 2016
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The political and economic implications as well as the order of events of the Brexit are currently very hard to predict. We assume that Europe – as usual in recent years – will “muddle-through”. The ECB will not panic, but wait to assess the consequences of the UK’s choice to exit the EU. Due to Brexit we lower our 2017 German GDP forecast to 1.3% from 1.6%. About half of that is due to lower export growth. The other half of the revision results from lower investment in machinery & equipment by German corporates. All told, domestic demand should only feel a marginal impact given that the fundamental drivers – healthy labour market and construction sector – remain intact. Further topics in this issue: German consumers, labour market and Germany in the aftermath of the EU referendum in the UK. [more]
66
July 1, 2016
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Analyst:
Following the UK referendum, Brexit will also leave traces on German industry. After all, 7.5% of all German exports went to the UK in 2015, making it Germany’s third most important export market after the United States and France. The automotive and pharmaceutical industries are likely to be hit the hardest by Brexit. This is because the UK accounts for 12.8% and 10.5%, respectively, of these two industries’ total exports. In addition, they both generally have an above-average export ratio. The UK referendum is likely to have an impact on individual companies’ investment decisions and German companies’ UK pricing structures in the short term. [more]
67
June 8, 2016
Region:
Over the past century central banks have become the guardians of our economic and financial security. The Bundesbank and Federal Reserve are respected for achieving monetary stability, often in the face of political opposition. But central bankers can also lose the plot, usually by following the economic dogma of the day. When they do, their mistakes can be catastrophic. [more]
68
June 7, 2016
Region:
Fiscal councils can improve the sustainability of public finances. They can increase transparency and accountability of fiscal policymaking by providing unbiased information to the public and stakeholders in the budget process. The design of their mandates, independence, and their public role are key conditions determining effectiveness. The new European Advisory Fiscal Board (EAFB) can be a valuable addition but is unlikely to be a game changer. Far-reaching reforms on the Union’s fiscal framework remain contingent on political will. Independence is crucial for fiscal councils to have an impact. This holds for both the EAFB and national fiscal councils. In addition, cooperation between the new EAFB and national bodies is a necessary requirement for a “European System of Fiscal Boards” to work effectively. [more]
69
June 3, 2016
Region:
We revise down our Q2 GDP growth forecast from 0.3% to 0.1% as we expect material payback for Q1 strength. While we remain optimistic with regards to the labour market, we think that the impetus from low oil prices to real incomes is fading. In addition, the mild winter has allowed construction work to be brought forward, albeit the payback might be limited by the strength of underlying construction demand. Given weak export sentiment, falling investment goods orders and lower capacity utilisation, we think investment in machinery & equipment is going to weigh on Q2 growth. We maintain our 2016 GDP forecast (1.7%), though. Despite spending on refugees, the German national budget generated a surplus of 0.7% of GDP in 2015, the largest since 2000. However, the healthy short and medium-term fiscal outlook only marginally reduces the need for the reform of public finances. [more]
70
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