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.

September 8, 2021

More incentives and opportunities instead of more redistribution

Region:

Germany

Focus Germany

Topic:

Economic and european policy, Germany's super election year 2021, Macroeconomics

Analyst:

Stefan Schneider

The consequences of the COVID-19 pandemic, ambitious climate policies, persistently negative interest rates, and large-scale security purchases by the ECB are increasingly raising the issue of a fair distribution. Policymakers tend to focus on the symptoms in order to appease their voters – and in doing so, they often neglect the root causes. [more]

July 30, 2021

COVID causes dip in migration: Higher wage pressure likely

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Topic:

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Net migration towards Germany was much lower in 2020 than pre-COVID. The migration flows from outside of the EU were particularly hampered whereas migration within the EU fell by 'only' 5% compared to 2019. As a consequence, the new demand for housing was much lower than in previous years which helped to reduce the housing shortage. By contrast, the lack of qualified and non-qualified workers in the labour market has become more severe through the pandemic. [more]

July 27, 2021

Recent floods to have limited impact on growth outlook and election outcome

Region:

Germany

Germany Blog

Topic:

Macroeconomics

Analyst:

Barbara Boettcher, Jochen Moebert, Marc Schattenberg, Marion Mühlberger, Sebastian Becker, Stefan Schneider

The recent flood caused by heavy rain was among the most severe natural disasters hitting Germany since reunification. More than 170 people lost their lives and many private homes and public buildings, roads and municipal infrastructure were destroyed. Since the flooding occurred in regions with low industrial density, the expected negative impact on overall economic activity, in particular on industrial production, should be relatively limited. Still, the regional impact on agricultural production (such as wine-growing) might be significant. Some of the most recent polls already fully capture post-flood views. As expected, there is no big shift in voter preferences. The events will likely confirm voters' previous choices. [more]

July 22, 2021

Heightened inflation risks in Germany: For real or just the usual paranoia?

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Germany has weathered the COVID-19 crisis better than most other EMU partners. With a much smaller output gap and additional headwinds from several structural trends it is more prone to experience higher inflation, in fact, it already has. Given that the ECB will aim its policy towards the EMU average inflation, German inflation could exceed the 2% mark for several years, without triggering an ECB policy response. The ECB's new strategy with the increased 2% symmetric inflation target - implying the acceptance of inflation overshoots - and its announced preparedness to wait until it is fully convinced that its policy has worked before adjusting its policy, make such a scenario even more likely. [more]

June 21, 2021

The return of big government spending: Will this time be really different?

Region:

Germany

Focus Germany

Topic:

Germany's super election year 2021, Macroeconomics

Analyst:

Sebastian Becker

Since the start of the COVID-19 pandemic the US has launched fiscal packages worth USD 5.3 trillion (25.5% of GDP). With new fiscal plans in the pipeline the total stimulus could even exceed USD 9 trillion (or 40% of 2020 GDP). Although the success of this bold US experiment is far from certain, it has started a new trend in fiscal policies. As low interest rates have depressed governments’ interest bills – despite surging debt – many observers advocate to make greater use of deficit spending for funding a public investment campaign over the next decade. Given weak growth prospects, restoring debt sustainability seems a Herculean task for high debt countries. But even some “fiscally prudent” countries like Germany face severe fiscal challenges due to rapid population ageing. [more]

June 10, 2021

Midyear review: Real economy on track, but higher inflation

Region:

Germany

Focus Germany

Topic:

Banking and financial markets, Economic and european policy, Germany's super election year 2021, Macroeconomics, Real estate, Sectors and resources

Analyst:

Barbara Boettcher, Eric Heymann, Jan Schildbach, Jochen Moebert, Marc Schattenberg, Marion Mühlberger, Sebastian Becker, Stefan Schneider

Q2 GDP should be o.k., despite April’s little stumble. Strong external demand and depleted finished goods inventories suggest a strong bounce back once current supply constraints ease. Consumers’ economic outlook and income expectations are improving. Together with an expected normalization of the savings rate that should provide a strong underpinning for consumption growth. We stick to our Q2 GDP forecast of close to 2% qoq and 4% for the whole year. The rate of inflation has been rising sharply since the start of 2021. With price dynamics continuing to outstrip expectations and given the prospect of stronger economic recovery in the summer, we now expect the annual average CPI inflation rate to rise to 2.8% in 2021, monthly numbers could even touch 4%. [more]

June 4, 2021

Social cohesion top priority as no. of ICU patients drops sharply

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The third COVID-19 wave in Germany is ebbing. The number of ICU patients – one of the key parameters of the pandemic – peaked at the end of April, at above 5,100 cases. At the end of May the number was below 2,500. If the trend continues due to vaccinations and warm weather, the number of ICU patients will fall below 1,000 in mid-June. [more]

May 7, 2021

Economy ready for take-off – election polls hanging in the balance

Region:

Germany

Focus Germany

Topic:

Economic and european policy, Germany's super election year 2021, Macroeconomics

Analyst:

Barbara Boettcher, Jochen Moebert, Marc Schattenberg, Marion Mühlberger, Stefan Schneider

The catalysts for a strong expansion of the German economy during the summer half are falling into place: Global demand is picking up strongly and the vaccination momentum is finally accelerating. Given the slightly smaller than expected drop of Q1 GDP (-1.7%) and upward revisions to H2 2020, we have lifted our GDP forecast for 2021 from 3.7% to 4.0%. Meanwhile election polls are hanging firmly in the balance. The nominations of Annalena Baerbock and Armin Laschet as chancellor candidates have clearly helped the Greens to gain ground. The current shift in voters’ sentiment allows for a whole bunch of coalition options. [more]

April 28, 2021

Working from home potential only half fulfilled in Germany. Is there a productivity paradox?

Region:

Germany

Talking Point

Topic:

Macroeconomics

Analyst:

Jochen Moebert, Marc Schattenberg

We compare the current debate with the discussion about the introduction of the computer in the 1980s. Then as now, positive and negative effects on a macroeconomic level could almost cancel each other out at first. Accordingly, we anticipate that the question of productivity is only likely to be answered in some years’ time. [more]

March 23, 2021

Germany: Government will present another XXL supplementary budget

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The federal government will present a supplementary budget for 2021, which would be the third supplementary budget over the past year. The volume could reach as much as EUR 60 bn (1.7% of GDP). As a result, 2021 net federal borrowing could possibly rise to as much as EUR 240 bn (6.8% of GDP), an all-time high in German history. We still stick with our 5.9% headline deficit forecast for the general government level as we doubt that all the money will be spent. This implies a structural deficit of nearly 5% of GDP this year (2020: -1.8% of GDP). [more]

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