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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.

263 (61-70)
December 6, 2016
Region:
Analyst:
Inequality is dominating the political debate in various countries still characterised by sluggish economic recovery and high unemployment even several years after the financial crisis. In this note we look at trends, drivers and solutions. Four points stand out from the trends. First, global income inequality has increased over the last three decades. Second, the integration of the EM into the global economy has allowed aggregate income levels to converge towards AE levels, lifting millions out of poverty. Third, the AE have been better able to control income inequality via redistribution. Fourth, aggregates can be deceptive. Rising income inequality is associated with globalisation, technological change and migration. At the same time they have had an undeniably positive impact on aggregate income. The policy dilemma is in resolving the tension between the increase in income and its unfair distribution. [more]
61
November 23, 2016
Analyst:
Despite a growing role of electronic payments, demand for cash is on the rise in Europe. Euro cash in circulation has increased to EUR 1.1 trillion, three times as much as in 2003. Cash limits the power of monetary authorities, provides data protection and can therefore act as a guarantor of civil liberties. On the other hand, it is often associated with a stronger shadow economy, even though the shift towards a cashless society seems to trigger higher levels of card fraud. [more]
62
November 8, 2016
Region:
Over the next three to five years, global trade is likely to grow only at or around the same pace as global GDP. This structurally weaker momentum will be reflected in slow growth in the global and regional flow of goods, as has already been the case in recent years. In its role as an open, export-oriented economy, Germany – and the German logistics sector in particular – will continue to feel the sting of this development. At a nominal average of 2% a year, turnover growth in the sector is likely to be below the long-term average in the years ahead. [more]
63
November 1, 2016
Region:
While European central bankers commend themselves for the scale and originality of monetary policy since 2012, this self-praise is increasingly unwarranted. The reality is that since Mr Draghi’s infamous “whatever it takes” speech in 2012, the eurozone has delivered barely any growth, the worst labour market performance among industrial countries, unsustainable debt levels, and inflation far below the central bank’s own target. While the positive case for European Central Bank intervention is weak at best, the negative repercussions are becoming overwhelming. This paper outlines the five darker sides to current monetary policy. [more]
65
October 28, 2016
Region:
German wage growth slowed in H1 2016 and there is a range of factors that are likely to also put a lid on the pick-up in 2017. The impact of labour shortage is limited by material mismatch between the qualifications of the unemployed and those sought by employers as well as substantial immigration flows. High real wage gains have pushed up unit labour costs and weighed on corporate profitability, which is further undermined by low productivity growth. Cautious wage agreements in 2016 on average stipulate only 2% wage increases in 2017. Despite a 4% increase in the statutory minimum wage, aggregate wages should increase by only around 2 ½%. According to our forecasts, next year could see the growth rate for industrial production in Germany drop to 0.5% in real terms. Regarding output in Germany’s large industrial sectors we do not expect major outliers. Also in this issue: “The View from Berlin. All lights on the debates about personalities and tactical gambits.” [more]
66
October 4, 2016
Region:
The policy of low and negative interest rates has had a limited impact on the returns on household financial assets in Germany to date. The nominal total return has averaged 3.4% over the last four years. Even nominal returns on interest-bearing investments did not slip below 2% until 2015 because a large proportion of longer-dated and mostly higher-coupon investments dampened the effect of evaporating market returns. High and stable revaluation gains have also buttressed total returns over recent years. They have probably been enhanced in no small measure by the ECB’s Quantitative Easing programme. Interest income and revaluation effects are likely to be a greater burden in 2016 and 2017. The income return on other assets is also likely to drop on account of the financial market environment. The scope for further significant revaluation gains is likely to be limited given already very high valuations. In 2017 the real total return could even become negative (again). [more]
67
September 30, 2016
Region:
Brexit affects regional policy both in the UK and in the EU27. It has a direct impact via financial adjustments for the individual funds, and indirect effects, possibly influencing the budgetary debates to come and adjusting regional policy priorities. However, the effects are highly contingent on the timing of Brexit and the planning processes and preparations for the new EU budget beyond 2020. The biggest stakes are potential changes to the structural funds which invest all across the EU. Finally, there is the issue of possible future cooperation between the EU27 and the UK after a Brexit. In principle, regional policy programmes already provide for some options here. However, the specific arrangements and conditions are only going to be defined as part of the negotiations to structure the new relationship. [more]
68
September 27, 2016
Region:
Analyst:
The Climate Action Plan 2050 is intended to show how Germany can meet its climate change targets; it is currently out for consultation with Federal German government departments. There was intense public criticism when individual passages of an earlier draft of the plan were diluted at the instigation of the German Chancellery. In this political discussion, long-term political ideals are confronted by cautious (more realistic?) recent assessments of technological progress, the economies of scale achievable by climate-friendly technologies, and adoption by consumers. The Climate Action Plan remains vague in many important aspects, such as the technologies to be used to meet climate change targets, the approximate absolute costs that can be expected, the restrictions on consumer sovereignty and commercial freedom of choice that politicians are considering and the future infringement of ownership rights and vested interests. [more]
69
September 2, 2016
Region:
Against the backdrop of strong Q2 growth and the revision of historic data, we increase our GDP forecast for 2016 to 1.9% (from 1.7%). For 2017 we lower our growth forecast to 1.0% (from 1.3%). Muted wage growth will likely weigh on consumption growth and subdued exports as well as high global uncertainty might negatively impact equipment investments. Further topics in this issue: Fiscal balance, Current account surplus, Retail investors, German industry and View from Berlin. [more]
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