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The German economys Achilles heel

March 4, 2019
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The recession in German industry can be traced to the massive slowdown of global trade in 2018. Will the German service sector withstand the recession in industry, as some recent survey data seems to suggest? We doubt it. In previous downswings in the manufacturing sector services were pulled lower, too. Indeed, the two sectors' output trends during 2018 did already follow this pattern. (Also in this issue: Economic Minister Altmaier's National Industrial Strategy 2030, the German Federal Budget, lower total and rental inflation thanks to new basket, corporate lending in Germany, the view from Berlin) [more]

More documents about "Macroeconomics"

257 (109-120)
September 17, 2015
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Analyst:
109
The healthcare sector uses advanced digital equipment that is supposed to accelerate medical progress and at the same time ensure economic efficiency. However, the gaps that exist are extremely worrying. In many highly developed advanced economies, and especially in Germany, there are already signs of the coming challenges connected with predicted population ageing and the associated shortage of doctors and the pressure on costs in the healthcare system. Here, technological progress in all its facets, from teleconsulting right through to 3D bioprinting, can dampen the increase in healthcare costs without adversely affecting quality. However, before this potential for boosting macroeconomic efficiency can be tapped there are economic, legal and societal obstacles that need to be surmounted (with regard to data protection, remuneration systems, education and network expansion, for example). The first steps in the right direction have already been taken – albeit with extreme caution and circumspection in some of these cases. In this respect it can certainly help to take a look at the industrial sector where digital technology is already making inroads under the “Industry 4.0” moniker. [more]
September 17, 2015
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Analyst:
110
Augmented reality is far more than the much-discussed smartglasses that are equated with horrific dystopian scenarios in which everyone is under surveillance. The fact is that augmented reality supports people in their day-to-day activities, extends their perception and facilitates communication. That is why it is important not to write off the technology in its entirety, simply because of one individual application, but instead to seize the highly attractive opportunities presented by this fast-growing market. German companies, however, would probably do well to offer customised services for commercial applications in niche markets where the tech giants have not become established. [more]
September 4, 2015
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Analyst:
111
Free trade stimulates economic activity in all the signatory countries. The free trade agreement between the EU and South Korea is a relatively recent example providing evidence of this fact. In H1 2015, German goods exports to South Korea were up by more than 50% on the level before the agreement came into force in July 2011; by contrast, total German exports increased by merely 13% in the same period. True, German imports from South Korea fell during this period. However, this was due to two sector-specific one-off effects. Stripping out these effects, the imports rose at an above-average pace. The positive economic stimuli should also be a strong argument in support of the current TTIP negotiations. [more]
September 1, 2015
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112
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 27, 2015
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Analyst:
113
What is the story with the carbon bubble? How great is the risk of conventional energy company valuations plummeting on account of ambitious climate protection policy? There may be many reasons for investors to channel less money into "fossil fuel companies" than before or to abandon them altogether and opt for other types of investment instead. However, one should not put too much stock in the reason being an ambitious, reliable and internationally comprehensive climate protection policy or a global decline in demand for fossil fuels. A carbon bubble is an unlikely development in such an environment, especially since the evolutionary nature of climate protection policy and technological changes in the energy sector offer the respective companies opportunities to adapt over time. [more]
August 19, 2015
114
Between 2000 and 2014, unit passenger car sales grew by 27.5% in China on average – per year. However, for the past several months there have been signs of the dynamic growth petering out; from May to July 2015 sales were in fact down 1.3% on the corresponding year-earlier level. The average growth of car demand in China is poised to plummet to a single-digit rate in the next few years. This is a step towards "normality". The anticipated slower growth in demand for passenger cars – coupled with growing production capacities in China for the time being – are likely to lead to further intensifying price and competitive pressures in the Chinese market. German makers of premium-segment cars will be unable to escape completely unscathed from the impact of such a trend. [more]
August 17, 2015
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115
Big data is a hot topic. The large digital platform operators in particular have long recognised the economic potential of algorithm-based data analysis. They demonstrate this to billions of customers professionally every day. With their analytical technologies they generate high revenues and tie us loyal customers ever more firmly to their platforms via convenient and, above all, individualised services. A steadily growing number of companies want to imitate this lucrative lock-in effect so they can also capitalise on the benefits of big data. Nonetheless, in many sectors the implementation of modern data analysis tools is proceeding only sluggishly. Contrary to the expectations of some market participants, big data is not a simple add-on. [more]
August 14, 2015
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116
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]
August 13, 2015
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Analyst:
117
In March 2015, the 28 European Heads of State and Government committed themselves to creating an Energy Union. In principle, the commitment to even stronger cooperation on energy and climate issues is a step forward, even though the decisive impetus came from grave concerns about potential gas supply disruptions as a result of the conflict between Russia and Ukraine. The current discussion also indicates that the Energy Union should initially focus on the further improvement of natural gas supply in Eastern Europe. The further development of infrastructures and markets for grid-based energies are likely to become target areas as well. By contrast, contentious topics such as the nuclear phase-out in Germany and country-specific subsidy programmes for renewable energies are unlikely to be a target area yet. We thus expect an incremental policy of small steps, i.e. by no means a rapid and radical transformation of the European energy sector as a whole. [more]
August 11, 2015
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Analyst:
118
Given the merely average state of communications infrastructure in Germany today, this country could fall behind in the international competition to attract investment. This worry is exacerbated by the fact that even within Germany there is a risk of a significant gulf developing between the regions. However, while broadband expansion is indeed making progress in the densely populated regions, major challenges exist in rural regions with respect to return on investment. When it comes to bridging systemic profitability gaps, the government will have to step into the breach if such projects are also to progress. The funding additionally earmarked in the federal budget and the revenues currently generated from "Digital Dividend II" should provide stimuli for expansion. However, despite government aid it must always be clear that broadband expansion can only be profitable in the first place if modern networks are complemented with modern services. [more]
August 10, 2015
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Analyst:
119
German manufacturers increased output by 0.2% qoq in real terms in Q2 2015. However, growth will probably be slower in H2 than anticipated to date. Therefore, we are revising our forecast for 2015 output to the downside – from 1.5% so far to 1% (both in real terms). The moderate uptrend is roughly set to continue in 2016. Manufacturing output could climb by 1% again in the coming year. This means its growth rate would continue to fall short of the long-term average. Furthermore, manufacturing's share in Germany's total gross value-added would decline. [more]
August 7, 2015
Region:
120
It is the classical dilemma of any currency union that a single monetary policy cannot possibly be appropriate for everybody if members are at very different stages of the business cycle. To get a feel for the scale of monetary (mis-)alignment, we calculate central bank rates as implied by a modified Taylor rule. [more]
4.4.1