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Jochen Moebert

More documents written by Jochen Moebert

53 (25-36)
September 6, 2017
Region:
25
Germany booming but wage-inflation still missing. We have lifted our 2017 GDP forecast from 1.6% to 1.9%. 2018 we revised only marginally up (from 1.7% to 1.8%) as we expect euro-induced export headwinds to counteract domestic strength. In H1 the economy expanded with an annualized rate of 2.6%. With EUR appreciation feeding through only gradually and capex picking up, GDP growth should slow only marginally in H2. 2018 kicks off with wage negotiation in key sectors. The strong labour market suggests wage settlements north of 3%, but the (classic) Phillips curve nexus is only weak and other factors could weigh. (Also included in this issue: German wage round in 2018, industry output forecast, The view from Berlin) [more]
August 31, 2017
Region:
26
During the past four years, prices for owner-occupied homes have risen by c. 30% and rents by 15% across Germany. So far, the government’s housing policy has hampered rather than promoted residential construction. A few weeks ahead of the German parliamentary elections we take a look at the housing policies spelled out in the election programmes of the six largest parties. There are several ideas to make it easier for people, in particular families with children, to buy homes. However, additional policy-induced stimulus for demand might push prices upwards, particularly since supply is relatively inelastic. In that case, any electoral gifts would not benefit the families, but only the property sellers. [more]
August 8, 2017
Region:
27
Forecast for German Q2 GDP lifted to 0.8%. Strong private consumption boosts retail sales. Germany’s fiscal outlook: Goldilocks will not last forever. The view from Berlin: Asylum policy & refugee issues back on stage. [more]
July 7, 2017
Region:
28
The German economy is likely to have maintained its rapid growth rate in the second quarter. Consumer spending, in particular, has been stronger than expected thanks to the recent fall in oil prices and the continuing significant rise in employment levels. We have revised our GDP forecast for the whole year upwards to 1.6% (1.3%) which is equivalent to a calendar-adjusted rate of 2%. Considerable house price increases in 2017 and 2018 – and more significant wealth effects? The view from Berlin. Summertime and election campaigns. [more]
June 6, 2017
Region:
29
After Q1’s sturdy 0.6% qoq GDP growth, soft indicators do not signal any moderation of the growth momentum. Employment in 2017 so far, has been expanding at similar clip as in 2016, making our 1% consumption forecast for 2017 quite conservative. Exports have rebounded in the winter half – in line with global trade. The growth momentum of global trade seems to have peaked; therefore, we remain cautious, predicting 3.6% German export growth in 2017 after 2.7% last year. In combination with lingering geo-political uncertainty this will weigh on investment spending, where a utilization rate of 2pp above its long-term average suggests a still limited necessity to invest. Following Q1 GDP growth of 0.6% we have revised our 2017 GDP forecast to 1.3% (1.1%). Latest confidence surveys, however, hint at further upside potential and increasing risks of over-heating for 2018. Political observers in Germany have recently been focusing on the SPD’s ups and downs in the polls and the CDU’s reverse showing while smaller parties are fighting for public attention. From the present point of view (polls) a Jamaica coalition is the sole arithmetically feasible alternative to a renewed grand coalition after the September election. (Further topics: German industrial output – forecast for 2017; Corporate funding in Q1 – lending) [more]
May 26, 2017
Region:
30
The massive overvaluations on the euro-area market for residential real estate (as measured by the price-income ratios for 2007 and 2008) are a thing of the past. Currently, house prices are excessive only in several smaller countries. However, this situation is likely to change towards the end of the decade if the dynamic uptrend in German house prices continues as expected. [more]
May 5, 2017
31
Growth in global trade almost stagnated at just 1.3% in 2016, and in some months was even negative. During winter, global trade picked up again, rising by around 3% compared to the same period a year earlier. Given the positive sentiment prevailing across the globe, this rebound could well continue. However, this trend is not yet being fully reflected in other hard economic indicators, usually highly correlated with global trade, and sentiment may therefore overstate the actual trend a little. Still, our simple model of world trade, which suggests moderate growth of just over 2% in 2017 and around 3% in 2018 might represent the lower limit of the forecast range. However, compared to previous cycles the upturn could remain weak, not least because of the global trade restrictions that have been progressively ratcheted up since 2008. [more]
April 6, 2017
Region:
32
In international debate public investment is often regarded as a useful lever for promoting higher domestic demand. Despite international criticism and political declarations of intent, public investment in Germany has only increased moderately over the past two years and has remained average, at best, on an international scale. In the coming years, however, public investment is expected to grow significantly. The current investment plans for the federal budget are 40% higher than those adopted in 2013. Public contracts for the construction industry in 2016 were between 15 and 27% above the average of the previous 10 years. The excellent state of the public finances at the various government levels also supports the prospect of increasing investment growth. However, severe capacity shortages in the construction industry are likely to mean that the high demand for investment will not quickly lead to an increase in construction activity. (Further articles: German housing market, Corporate bond boom in Germany, Result of the Saarland election) [more]
February 22, 2017
Region:
33
The headline inflation rates, which have increased substantially in recent months, have rekindled the debate surrounding the ECB's bond-buying programme. German producer prices have also risen sharply in recent times. In December 2016, the prices of metal (up by 5% on December 2015) and energy (up by 10%) increased particularly sharply. Nevertheless, the remaining inputs (weighting: 83.6%) continued to show no inflationary pressure at all. [more]
January 13, 2017
Region:
34
Munich remains the most dynamic German city when it comes to property, with its fast-rising population and historically low vacancy rate likely to lead to further price increases for many years to come. Further price rises are also expected in Berlin, although the main factors at play here are the very buoyant labour market and the fact that prices and rents are still relatively low for a European capital city. Of the German cities that were analysed for this report, Frankfurt has shown the lowest increase in prices in the current cycle. However, we are now seeing a Brexit effect, which is driving up prices for family homes in particular. Sluggish rent growth and a high level of construction activity are the most striking trends in Hamburg, which could make the city more sensitive to interest rate movements than other urban centres. The situation is similar in Düsseldorf, where the vacancy rate in the current cycle is relatively high for a large German city. For every city analysed here and for the overall German housing market we anticipate further price increases in the coming years. All the macroeconomic conditions that might signal an end to the cycle – such as a turnaround in interest rate policy, a massive expansion of supply and/or a slowdown in migration to Germany – are not yet fulfilled and it is likely to be several years before they materialise. Consequently, we expect rents and property prices in the major German cities and across the country to continue to rise sharply in 2017. [more]
December 21, 2016
Region:
35
German GDP growth is expected to slow somewhat in 2017 following considerable momentum over the last two years. We note the growth rate will almost half, to 1.1%, in 2017, but around half of this is due to a smaller number of working days. While the economy will likely have to do without a number of special factors that provided a boost to domestic demand in 2016, we believe that the underlying robust domestic economic growth path remains intact. Weak global trade and political uncertainty will dampen exports and investments. The ECB has in all but words indicated that tapering will begin in 2017. European interest rates are likely to remain at very low levels in 2017, at least at the short end. [more]
November 28, 2016
Region:
36
The question regarding the consequences of a Brexit for the EU, the United Kingdom and Germany is expected to remain unanswered for some time. The political uncertainties and exit scenarios range from a contentious separation to a second referendum. At present, however, we can expect that Frankfurt will be one of places to benefit most from a Brexit. In light of the differences between the size of London and Frankfurt, London's crumbs could become Frankfurt's pie. The relocation of jobs to Frankfurt is also likely to boost property demand. The additional demand potential is welcome on the Frankfurt office market because it will equalise structurally induced reductions in the financial sector and will tend to lead to further reductions in vacancies and increase rents. The assumed 5,000 office workers are likely to relocate to the highly priced sub-markets close to the city centre. However, as new building projects also focus on these sub-markets, positive demand effects will be diluted. Because of existing demand overhangs, disadvantages are emerging on the Frankfurt residential property market from a potential relocation of employees. Price growth and the shortage of housing will remain elevated for the foreseeable future. An additional 5,000 homes and a correspondingly elevated housing shortage are likely to drive prices up by more than EUR 100 per m². While purchase prices remain affordable thanks to low interest rates, they are strongly dependent on future interest rate developments. [more]
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