Jamaica coalition unlikely to offer a goody bag

Bundestag elections 2017, Economic and european policy, Macroeconomics

Topic:

Analyst:

Barbara Boettcher, Dieter Bräuninger, Jochen Moebert, Sebastian Becker, Stefan Schneider

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The view from Berlin: Jamaica unlikely to trigger fundamental policy changes. The total additional fiscal impulse provided by a Jamaica coalition could in our view amount to between EUR 15 bn and EUR 20 bn in 2018. This would be only marginally more than the EUR 15 bn tax cuts "promised" by the outgoing Minister of Finance, which we had already taken into account in our 1.8% GDP forecast for 2018. Proposals in the FDP's election platform to scale back the ESM and to install an orderly EMU exit procedure have raised concerns among some EU politicians. We doubt that these two proposals will make it into the coalition treaty. Despite the FDP's insistence on more market- and rule-based procedure within EMU, it is very unlikely that Germany would not provide the necessary support if another EMU country slipped into acute crisis. (Also included in this issue: Public finances after the election, World trade) [more]

Deutsche Fassung ➜

More difficult international environment dampens export outlook

November 8, 2018

Region:

International

Analyst:

Chart in Focus

German exporters have had to deal with numerous challenges over the last few years. Exports to the UK, Russia and Turkey have been unusually volatile and trended downwards. Nevertheless, aggregate German exports rose by more than 3% p.a. in real terms between 2012 and 2017. Since the beginning of 2018, the trade conflict between the US and China has steadily intensified. The challenges might spread and turn into a global problem if the US begins to levy import tariffs on additional imports from China and/or increases existing tariffs. Doing so would probably cause the Chinese authorities to respond in kind. [more]

Increasing headwinds but fiscal surplus (still) rising

October 4, 2018

Region:

Economic and european policy, Macroeconomics

Topic:

Analyst:

Barbara Boettcher, Dieter Bräuninger, Eric Heymann, Jochen Moebert, Sebastian Becker, Stefan Schneider

Weak currencies and economic difficulties in emerging markets dampen German exports. Over the past few months, the euro has appreciated against the currencies of many emerging markets which will likely curtail German exports to these countries in 2018 and 2019. In 2017, the ten largest German export markets among the emerging markets accounted for some 16% of total exports. According to our estimation model, German exports to this country group are set to increase by a nominal 3.5% to 4% in 2018 and 2019. This would be a noticeable loss of momentum compared with 2017 when exports increased by just over 7%. The country group’s share of total exports for the industrial sector is highest for traditional capital goods manufacturers, with mechanical engineering taking the lead. The ten emerging economies examined accounted for just over 22% of all exports in this sector in 2017. [more]

Clouds on the horizon for Goldilocks

September 4, 2018

Region:

Economic and european policy, Macroeconomics, Real estate, Sectors and resources

Topic:

Analyst:

Dieter Bräuninger, Eric Heymann, Jochen Moebert, Stefan Schneider

German economy in H2 still goldilocks despite external headwinds. We maintain our forecast of around 0.5% quarterly GDP growth in both Q3 and Q4, following average growth of 0.4% in H1. The H1 growth composition, however, marginally lowers the annual average to 1.9% (2.0%) and risks remain more skewed to the downside. In Berlin, the Groko agreed on an expensive social policy package. Albeit medium- and long-term financing of the package is not secured, FM Scholz came up with an additional, even more costly idea for extended pension benefits. A silver lining could be if the Groko managed to launch a law on labour migration. (Also included in this issue: German manufacturing industry, shortage of qualified workers in the construction sector, corporate taxes) [more]

More signs of slowing (underlying) growth

June 11, 2018

Region:

Economic and european policy, Macroeconomics, Real estate

Topic:

Analyst:

Barbara Boettcher, Jan Schildbach, Jochen Moebert, Marc Schattenberg

In April industrial production remained sluggish and new orders heavily declined, Q2 M&E investment growth could be restrained. No positive impulses are expected from net exports as long as international trade tensions continue. For these reasons, we have recently adjusted our annual GDP growth forecast from 2.3% to 2%. Impulses for Q2 growth should mainly come from the construction sector and consumption. Thanks to high wage settlements, private consumption should be again a key growth driver and the expansion of 17 consecutive quarters in a row is likely to continue. (Also included in this issue: lacklustre new construction, lending in Germany, the view from Berlin) [more]

Understanding the blockchain revolution!

June 7, 2018

Region:

Topic:

Analyst:

When reporting on bitcoin, blockchain and cryptocurrencies these days, the speaker is faced with the question: Shall he discuss the technology or move directly to the presentation of the social and economic implications? Conveying a complex technology in just a few minutes is risky. In Alice's rabbit burrow, the speaker and his audience quickly lose track of each other. But the audience may also be left clueless by the direct presentation of the potentially revolutionary implications. In the face of this dilemma and the complexity of cryptosystems, we will try to shed light on the issue by means of metaphors. We hope you will join us on our journey into the blockchain universe. [more]

Trade tensions challenge corporates and government

April 10, 2018

Region:

Barbara Boettcher, Eric Heymann, Jochen Moebert, Sebastian Becker, Stefan Schneider

Topic:

Macroeconomics

Analyst:

In 2017, Germany’s goods exports rose 6.2% in nominal terms, and the trade surplus was the second highest ever. In particular, exports to China and the Netherlands increased considerably. US comments on free trade have caused irritation recently and dampened the outlook for German exports, even though the EU (and, consequently, Germany) have so far been exempted from higher US import tariffs. German capital goods producers and pharmaceuticals companies would be hit hardest by a trade dispute, as the export ratios of these sectors are particularly high. Moreover, the US are an important market for them. (Also included in this issue: rental inflation, fiscal outlook 2018/19, Merkel's fourth legislative period) [more]

Coalition treaty – myopic policy approach

March 7, 2018

Region:

Bundestag elections 2017, Economic and european policy

Topic:

Analyst:

Barbara Boettcher, Dieter Bräuninger, Eric Heymann, Jochen Moebert, Josef Auer, Kevin Koerner, Marc Schattenberg, Sebastian Becker, Stefan Schneider

Standpunkt Deutschland (Engl.)

From the start, the negotiations were ill-fated. To begin with, the SPD leadership rejected a revival of the grand coalition (Groko). Then, the partly diametrically opposed interests of the parties involved, seemingly abundant financial scope and a lack of interest in fundamental reforms on the part of the German population led to a – in many areas – mixed bag of measures which, on balance, aims to further increase governmental control of the business sector and society at the expense of individual freedom. However, at present, the predominant feeling is relief that Germany now has a “decent“ government. But not only the coalition partners may soon wonder whether the price is too high. [more]

Video: Myths, misconceptions and misunderstandings Bitcoin fact check

February 19, 2018

Region:

International

Topic:

Digital, Macroeconomics

Analyst:

Banking and financial markets, Digital

dbInSights - public

Opinions differ when it comes to bitcoin. Discussions are triggered largely by bitcoin’s spectacular price increasess and are not very informed or nuanced. In this paper we focus on several standard claims, which we will put into context and, if necessary, rectify. This will hopefully help our readers to familiarise themselves with the topic. [more]

Bitcoin: Myths, misconceptions and misunderstandings

February 9, 2018

Region:

International

Topic:

Analyst:

EU Monitor

The German housing market in 2018

January 26, 2018

Region:

Topic:

Analyst:

Metropolitan areas in Germany are booming. The current real-estate cycle started in 2009 and has led to significant price increases for residential property in many cities. Prices for apartments have as much as doubled in some cities. Strong population and employment growth and declining unemployment rates are driving demand, and supply elasticity is low. Overvaluations are rising, and the risk of a price bubble in the German housing market is increasing. The price uptrend is likely to continue for several years, at least in most major cities in Germany. [more]

Underestimated inflation: A problem only in Berlin or in Germany as a whole?

December 21, 2017

Region:

Economic and european policy, Macroeconomics

Topic:

Analyst:

Talking Point

House prices and rents have risen considerably during the current house price cycle. Rents are the component of the consumer price basket which has the biggest impact on overall inflation. While recent newspaper reports and market figures reflect the uptrend in rents, the official statistics are suspiciously free of it. This holds especially for Berlin. Consequently, official figures for the capital – and probably for Germany as a whole, if to a smaller extent – probably underestimate actual inflation. [more]

Outlook 2018: Robust growth fragile politics

December 15, 2017

Region:

Bundestag elections 2017, Economic and european policy, Macroeconomics

Topic:

Analyst:

Barbara Boettcher, Dieter Bräuninger, Eric Heymann, Jochen Moebert, Marc Schattenberg, Sebastian Becker, Stefan Schneider