With Q1 GDP growth revised to -0.3% we now expect annual GDP to shrink by 0.3% in 2023. With the expected US recession weighing on German economic momentum towards year end we have cut our annual forecast for GDP growth in 2024 to 0.5% from 1.0%. Meanwhile, the energy transition policy is putting strains on government cohesion, as can be seen from the failure to agree on a piece of climate legislation this week. Spending pressures and debt-brake limits add to tensions. Still, none of the three ruling parties has an incentive to trigger early elections. [mehr]

Artificial intelligence is an overnight success that has been many years in the making. To properly anticipate what AI innovation is to come next, we went back to the source, looking at patents and venture capital deal activity that will translate into the everyday AI applications of the future. [mehr]

The costs of electricity generation of different energy sources are often debated. Often, however, no distinction is made as to which specific costs are meant. While renewable energies have marginal costs close to zero and very competitive levelized costs of electricity, a high and increasing share of weather-dependent renewables leads to system costs. They result, for example, from the provision of back-up power plants and the falling average capacity utilization of all existing power plants. We discuss the different types of costs of power generation and note that investments in renewables are easier to realize than the construction of new back-up power plants. [mehr]

Artificial Intelligence has been a sizzling hot topic since ChatGPT was launched at the end of November. For once, the hype may be (almost) justified. At Deutsche Bank Research, we thought it was time to take a step back to give a clear perspective for investors and businesses, and to dig into what the latest flavour of AI, Generative AI, will really mean for our future. [mehr]

Companies with a large number of employees have a big problem. Quite simply, they fail to extract as much value from each staff member as do low-staff firms. Indeed, labour-intense firms tend to have a lower market cap, thinner margins, and lower growth rates.
AI may be the way forward. In this piece, we argue that AI will make workers more productive, particularly in high-staff firms. The reason is that the profitability of high-staff firms has the highest leverage to the performance of their labour force. AI will help upskill them and streamline repetitive and mundane tasks that are more prevalent in high-staff companies. [mehr]

Ist grüner Wasserstoff ein Allheilmittel gegen die Energiekrise? Nicht kurzfristig, sagt Eric Heymann, Senior Economist für Branchen, Technologie und Ressourcen bei Deutsche Bank Research. Die mittel- bis langfristigen Aussichten sind allerdings gut. [mehr]

Erfahrung mit grundlegenden technologischen Neuerungen legen nahe, dass KI letztlich netto Arbeitsplätze schaffen dürfte. Auch wenn viele Menschen befürchten, dass KI wie (z.B. ChatGPT) schon bald zu einem massiven Arbeitsplatzabbau und sozialen Verwerfungen führen könnte, lehrt uns die Geschichte, dass technologischer Fortschritt noch nie zu einer strukturell höheren Arbeitslosigkeit (geschweige denn Massenarbeitslosigkeit) geführt hat. Dies liegt vor allem daran, dass neue technische Errungenschaften bestehende Arbeitsprozesse nicht nur obsolet gemacht haben („Substitutionseffekt“), sondern in hohem Maße auch ergänzt und bereichert haben („Komplementierung“). [mehr]

Next week will mark six months since the launch of ChatGPT, the chatbot based on OpenAI’s GPT-3.5 large language model. There has been an extraordinary flurry of launches, hype and activity since then. Even in the past week, OpenAI, Google and Meta announced fresh products, OpenAI’s CEO testified in Congress, and the G7 called for “guardrails” on AI, among many other developments. [mehr]

The AI hype cycle is in overdrive. It feels like the volume of text generated by ChatGPT over the past six months has almost been matched by the volume of hyperbole about how foundation models will change the world. For once the hype is (mostly) justified. Generative AI is not another metaverse or, for that matter, another crypto currency. But it will change the world – for better and for worse. [mehr]

In dieser Woche werden zahlreiche Konjunkturindikatoren veröffentlicht. In Deutschland werden neben den finalen BIP-Zahlen für Q1 (einschließlich den Details zu den Unterkomponenten) die Mai-Werte für den Einkaufsmanager- und den ifo-Geschäftsklimaindex veröffentlicht. Mit Blick auf die nächsten Notenbank-Sitzungen dürften in den USA und Großbritannien vor allem die neuesten Zahlen zur Verbraucherpreisinflation im Interesse der Finanzmärkte stehen. Während die US-Kerninflationsrate unserer Einschätzung nach im April auf einem hohen Niveau von 4,6% gg. Vj. (Core PCE) verharrt sein dürfte, könnte sie in Großbritannien sogar leicht auf 6,3% (von 6,2%) angestiegen sein. Zudem werden noch die „Meeting Minutes“ der Fed veröffentlicht, die weitere geldpolitische Hinweise liefern könnten. Unsere US-Kollegen gehen davon aus, dass der Zinsgipfel (also die sogenannte „Terminal Rate“) mit aktuell 5,125% bereits erreicht sein dürfte. [mehr]