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Focus Germany

Focus Germany deals with macroeconomic and economic policy issues in Germany. Each issue also contains a timetable of financial and economic policy events as well as a detailed data monitor of German economic indicators.

72 (51-60)
November 5, 2014
Region:
We have cut our German GDP growth forecast from 1.5% to 1.3% for 2014 and further from 1.5% to 0.8% for 2015. We do not see Germany falling into a technical recession in Q3. But the 6 month slump of the ifo index has increased the risk that we might see a negative GDP print in Q4 2014 or Q1 2015. The positive effect of weaker oil prices will be offset by wage growth slowing from 3% plus this year towards 2% in 2015, as export-orientated sectors will respond to weaker external demand. Further topics in this issue: German industry: Temporary slowdown; German construction: Robust investment, but price momentum slowing; Inheritance tax: Constitutional Court ruling likely to weigh harder on business heirs; 25 years after the fall of the Berlin Wall: "Blooming landscapes" only in part. [more]
51
September 30, 2014
Region:
The recent positive surprises provided by real economic indicators have for now banished concerns that Germany might slide into recession in Q3. However, the ongoing geopolitical risks and the question marks hanging over the expected cyclical upturn will probably lead to weaker growth in exports and company investment. That is why we have scaled back our growth forecast for the winter half-year 2014/2015. Thus, we have lowered our forecast from 1.8% to 1.5%. In our current issue we also address Germany’s fiscal position, we analyse the consequences of potential Russian gas supply disruptions and we take a look at the investment behaviour of German households. [more]
52
September 2, 2014
Region:
German GDP only 1 ½% in 2014, considerable risks for 2015. We have scaled back our GDP forecast for 2014 from 1.8% to 1 ½%, as we now expect weaker growth in H2. This also reduces our forecast for 2015 from 2.0% to 1.8%. The risks that this still constitutes an overly optimistic forecast have increased significantly. The German investment cycle will likely be more subdued than expected due to the ongoing weakness of world trade and increasing geopolitical strains. Even the hitherto still robust private consumption is emitting its first warning signs. [more]
53
August 4, 2014
Region:
Economic growth probably suffered a worse setback in Q2 than initially presumed. We only expect stagnation now, but would no longer rule out a minimal decline. All in all, global economic conditions do not point to dynamic growth in H2. In particular, the tougher sanctions on Russia and the risk of further escalation of the conflict are set to weigh on business sentiment and investment activity in spite of Russia's low share in German exports. The debate triggered by ECB and Bundesbank comments about higher wage increases in Germany is likely to have a similar impact, even though the substance of the statements is less spectacular, on closer inspection, than the media hype. As uncertainties abound we have decided to refrain for now from making a downward revision to our full-year forecast of 1.8% GDP growth. [more]
54
June 30, 2014
Region:
After a good start into 2014, manufacturing output in Germany looks set to grow by 4% in real terms in the full year. Even though business expectations have recently weakened somewhat, they remain in positive territory. Despite the good labour market situation in Germany inflation has decelerated noticeably. The outlook of a recovering global economy, a sliding euro and the introduction of a nation-wide minimum wage in Germany lead us to forecast that inflation is bottoming out. After hitting 1.1% in the current year it could pick up to 1.6% in 2015. [more]
55
June 4, 2014
Region:
With the dream start into 2014 we have lifted our GDP forecast to 1.8% (from 1.5%). For 2015 we maintain our 2% call, as we expect that the only temporary increase in the sum of gross wages resulting from the introduction of the minimum wage will be offset by more cautious investment spending. [more]
56
May 2, 2014
Region:
Given the continued strong employment build-up and wage increases as well as slight increase in hours worked disposable income should grow by 2.5% even though monetary social benefits and income from self-employment and from investment are expected to rise only at a sub-par rate. Due to the falling inflation rate this allows real private consumption to rise by 1.2% in 2014, and might even have some upside potential. From 2015 the federal government plans to deliver a balanced budget. This year the federal budget will already run a structural surplus. Budgetary risks arise from higher interest rates and a weakening economy, as the budget includes barely any reserves for them while being exposed to potential additional spending on adjustments that need to be made to the minimum subsistence level (basic personal allowance) and children's allowance or for increases that need to be made to infrastructure spending. [more]
57
February 28, 2014
Region:
The details of the 0.4% qoq GDP increase released this week have not altered our GDP forecast of 1.5% for 2014. If anything, they have added to our suspicion that current surveys (corporate and consumer) might paint a too rosy picture. However, we have turned somewhat more optimistic with regard to 2015, increasing our GDP forecast from 1.4% to 2.0%. [more]
58
January 27, 2014
Region:
We see economic growth in the order of 1.5% this year. Continuously strong private consumption and a rise in investment in machinery and equipment for the first time in two years are expected to lay the foundation for this solid performance. Moreover, we expect net exports to rise slightly as well in light of a global economic recovery. The labour market will remain a fundamental pillar of domestic demand also in 2014. With oil prices still relatively stable and tame domestic price developments, we expect the rate of inflation to come in at roughly the pre-year level of 1.5% on average in 2014. After a nearly balanced public-sector budget in 2013 a slight surplus seems to be in store for 2014, and public debt will likely fall in the direction of 76% of GDP, down from 81% at the end of 2012. [more]
59
November 29, 2013
Region:
The coalition intends to hugely increase pension benefits, introduce a minimum wage and increase public spending. There is as little provision for tax hikes (SPD campaign issues) as for tax relief (CDU and CSU pledges). Trend growth, in particular labour supply, will be weakened. Inefficiencies in energy policy will be inadequately addressed. The sustainability of public finances will be substantially reduced. [more]
60
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