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Stefan Schneider

More documents written by Stefan Schneider

82 (49-60)
November 5, 2015
Region:
49
Since the last Focus Germany, some disappointing economic data have been published that fuelled the speculations around a slowing German economy. We do not believe that this requires revisions of our GDP forecast, though. Just like last year, the weakness of the industrial data is overstated by holiday effects. Nevertheless, there is a risk of an even lower foreign demand than stated by our already cautious estimates. This, however, is balanced by the upward risks for the domestic economy. Due to the migration dynamics over the summer months, we are reducing our budget forecasts for 2015 and 2016. Relative to gross domestic product we now expect surpluses of 0.3% and 0.0%, respectively (previously 0.7% and 0.5%). [more]
September 1, 2015
Region:
50
GDP growth accelerated slightly to +0.4% qoq in Q2 with disappointing details. The domestic economy was a drag due to the decline of investments and an inventory reduction. Consumption slowed. Net exports were the major growth engine. German exports benefitted from the weaker EUR and strong demand especially from the US. We cut our Q3 GDP growth forecast slightly to 0.4% qoq. Despite this downward revision, we modestly increase our 2015 GDP forecast to 1.7% due to the marginal upward revision of H1 numbers, and changes in the growth composition. Fundamentally our outlook remains unchanged. Domestic demand, esp. private consumption, is the primary growth driver and the external environment remains challenging. [more]
August 14, 2015
Region:
51
For the average German a sack of rice falling over in China has long been none of his business. In the meantime, however, the importance of events in China for the German economy has come to be recognised. China's unexpectedly weak economic indicators and the fluctuations in the Chinese stock market have increased the scepticism over recent months about whether China will achieve the growth target set by the government for this year of around 7%. Our China economist remains confident that the Chinese economy will stabilise following expected GDP growth of nearly 7% yoy in Q3 thanks to the support measures instigated by the government. However, German exporters are already having to contend with a marked softening of demand from China. [more]
July 31, 2015
Region:
52
German model – has a consensus economy reached its limit? German output growth poised to outstrip potential again in current year. Despite new government spending programmes there should be continued budget surpluses for the time being. Given the strengths of its institutional framework Germany has so far largely been able to avoid the possibility of distributional conflicts feeding through in the shape of higher government deficits and/or rising inflation. Demographic developments, not least, will probably put this resilience to the test. However, a new reform thrust is needed in view of decreasing locational advantages. It remains to be seen whether society will carry through with an update of the Agenda 2010 reforms. [more]
June 30, 2015
Region:
53
These days, financial market commentaries are often laced with expressions such as "topsy-turvy" and "Alice in Wonderland". Recently, even Bank of Japan Governor Kuroda described the need for unconditional faith in the inflationary impact of Japanese monetary policy with a reference to Peter Pan, quoting Peter as saying that (in his world) "the moment you doubt whether you can fly, you cease forever to be able to do it". [more]
June 29, 2015
Region:
54
While the core inflation rate has remained relatively stable since 2011 at an average of slightly above 1% yoy the oil price slump is the main reason for the temporary decline in consumer prices at the start of 2015. However, the oil price rise of some 30% since January and the stabilisation of the EUR exchange rate sent the German inflation rate out of negative territory after just one month and then made it accelerate to 0.7% yoy recently. We therefore expect slightly stronger increases in consumer prices of 0.5% this year and 2.0% in 2016. With our forecast the risks are more pronounced to the downside. The oil price might rise more slowly than expected on account of the global oversupply. In addition, the EUR/USD has now stabilised at above 1.10 after hitting its low in mid-April. Our forecast assumes EUR/USD parity by year-end. [more]
March 2, 2015
Region:
55
The Q4 GDP details corroborate that the German economy ended 2014 on a high note (+0.7% qoq vs +0.1% in Q3) as private consumption received a substantial stimulus from the drop of the oil prices. We increase our 2015 GDP forecast to 2.0% from 1.4% previously. This is especially due to the much larger carry-over effect courtesy of the marked Q4 GDP growth. In addition, we raise our Q1 GDP forecast to 0.5% qoq as the renewed oil price drop will boost consumption again. Sentiment also improved further in January/February with ifo expectations and the composite PMI pointing to 0.5% and 0.4% growth, respectively. [more]
February 2, 2015
Region:
56
Late last year we raised our GDP forecast for Germany from 0.8% to 1.0% on account of the steep downside correction on expectations for oil prices. We now expect German GDP growth to hit 1.4% in 2015. Reasons: Growth slightly exceeded expectations in Q4 2014; the oil price forecast for 2015 has been lowered again; and the euro has fallen more sharply against the US dollar than anticipated. Given this good outlook for the economy Germany's public budgets are likely to show a slight surplus again in 2015. Moreover, the current account surplus is set to jump to 8% of GDP. This suggests there will be further calls for Germany to use its fiscal room for manoeuvre to pursue a public investment programme. Also, international criticism of German economic policy is likely to grow louder. Further topics in this issue: German industrial output forecast upped to 1.5%, 10 "golden" rules for ifo, PMI and Co., The view from Berlin. [more]
January 6, 2015
Region:
57
Following a weak winter half in 2014/15 the economy looks likely to regain its footing as 2015 progresses. However, sluggish performance at the turn of the year means growth will probably average only 1% in 2015 after 1.4% in 2014. It is encouraging, however, that private consumption should remain a major pillar of growth, whereas net exports are likely to have a neutral impact. Nonetheless, signs are increasing that some – in our opinion misguided – economic policy moves (such as the introduction of a nationwide minimum wage as well as an enhanced pensions package) are weighing on the labour market and thus on consumption. Given a weakening of cyclical activity and the costs of economic policy measures, we expect the general government budget to be slightly in deficit in 2015. [more]
December 2, 2014
Region:
58
Underlying growth of the German economy has slowed in Q3. After average quarterly growth rates of over 0.3% qoq in the last 1 ½ years, GDP expanded just 0.1% in Q3. We expect about stagnation in the next two quarters with a risk of a negative print as sentiment has weakened further in October/November. The little momentum of global trade since 2012 points towards structural changes, which will affect German exports in particular. German export growth should therefore remain relatively muted during the next few years. We forecast average real German export growth at the lower end of a range of 4%-6% between 2014 and 2019, which should be buttressed by a depreciation of the euro. [more]
November 5, 2014
Region:
59
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]
October 29, 2014
Region:
60
Why are German wages/inflation not responding? Much of the answer lies in cultural factors and personal traits which manifest themselves in a high aversion to inflation. This in turn has led to Germany’s unique economic fundamentals and institutions. At the core it seems that Germans and German society can handle distribution conflicts involving time inconsistency problems better, on average, than many other nations. Given the German peculiarities the ECB has more time to run its supportive policy without creating new imbalances in the largest EMU economy. Therefore the ECB has scope to extend its balance sheet via private and most likely public QE. [more]
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