29.09.2016 • 40/2016
Joint Economic Forecast: German Economy on Track – Economic Policy needs to be Realigned
Thanks to a stable job market and solid consumption, the German economy is experiencing a moderate upswing. The GDP is expected to increase by 1.9 percent this year, 1.4 percent in 2017, and 1.6 percent in 2018, according to the Gemeinschaftsdiagnose (GD, joint economic forecast) that was prepared by five of Europe’s leading economic research institutes on behalf of the Federal Government. The most recent GD, which was released in April, predicted a GDP growth rate of 1.6 percent for 2016 and 1.5 percent for 2017.
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02.09.2016 • 35/2016
The German Economy: Still Robust Despite Sliding Sentiment
The prospects for the German economy are still quite favorable. While sentiment indicators suggest that growth will slow at the end of the year, domestic demand will continue on an upward trend. The German GDP should increase by 1.9% in 2016. For 2017 we expect a lower growth rate of 1.2%“Weaker export volumes and higher growth of imports are the relevant factors for the slowdown”, says Prof Oliver Holtemöller, IWH Vice president. Unemployment will rise a bit as more refugees enter the labor market. Consumer price inflation remains moderate. The general government balance (cyclically ad¬justed as well as unadjusted) will be in surplus in both 2016 and 2017.
Oliver Holtemöller
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24.06.2016 • 26/2016
UK’s “No” to EU will be costly for both sides
On Thursday 23rd, the British people have decided to leave the European Union (EU) Their vote not to remain in the European community was surprisingly clear. UK’s exit will have both political and economic consequences which are far-reaching for the country itself as well as the rest of Europe. “The reactions of the remaining member states are the crucial key now, especially France’s and Germany’s” says Reint E. Gropp, President of the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association.
Reint E. Gropp
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16.12.2015 • 45/2015
German Economy: Strong domestic demand compensates for weak exports
The upturn of the German economy is expected to gain further momentum as a consequence of strong domestic demand. Real gross domestic product is expected to increase by 1.6% in 2016. Consumer prices are expected to rise by 0.9%. Unemployment is expected to rise slightly because it will take time to integrate refugees into the labour market.
Oliver Holtemöller
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10.08.2015 • 30/2015
Germany Benefited Substantially from the Greek Crisis
The balanced budget in Germany is largely the result of lower interest payments due to the European debt crisis. Research from the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association shows that the debt crisis resulted in a reduction in German bund rates of about 300 basis points (BP), yielding interest savings of more than EUR 100 billion (or more than 3% of gross domestic product, GDP) during the period 2010 to 2015. A significant part of this reduction is directly attributable to the Greek crisis. When discussing the costs to the German tax payer of saving Greece, these benefits should not be overlooked, as they tend to be larger than the expenses, even in a scenario where Greece does not repay any of its debts.
Reint E. Gropp
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06.07.2015 • 27/2015
Rejection of Reforms as a Chance for Reforms
The President of the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association continues to see a chance for an agreement between the European Union (EU) and Greece. On the surface, Grexit looks now more likely than ever. But the resignation of Yanis Varoufakis, Minister of Finance, and the outcome of the referendum may also provide a chance for the Greek government to agree on reforms and save face. But the window of opportunity is closing very fast.
Reint E. Gropp
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Do Manufacturing Firms Benefit from Services FDI? – Evidence from Six New EU Member States
J. Damijan, Crt Kostevc, Philipp Marek, Matija Rojec
IWH Discussion Papers,
No. 5,
2015
Abstract
This paper focuses on the effect of foreign presence in the services sector on the productivity growth of downstream customers in the manufacturing sector in six EU new member countries in the course of their accession to the European Union. For this purpose, the analysis combines firm-level information, data on economic structures and annual national input-output tables. The findings suggest that services FDI may enhance productivity of manufacturing firms in Central and Eastern European (CEE) countries through vertical forward spillovers, and thereby contribute to their competitiveness. The consideration of firm characteristics shows that the magnitude of spillover effects depends on size, ownership structure, and initial productivity level of downstream firms as well as on the diverging technological intensity across sector on the supply and demand side. The results suggest that services FDI foster productivity of domestic rather than foreign controlled firms in the host economy. For the period between 2003 and 2008, the findings suggest that the increasing share of services provided by foreign affiliates enhanced the productivity growth of domestic firms in manufacturing by 0.16%. Furthermore, the firms’ absorptive capability and the size reduce the spillover effect of services FDI on the productivity of manufacturing firms. A sectoral distinction shows that firms at the end of the value chain experience a larger productivity growth through services FDI, whereas the aggregate positive effect seems to be driven by FDI in energy supply. This does not hold for science-based industries, which are spurred by foreign presence in knowledge-intensive business services.
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Musterknabe Osteuropa: Subventionskontrolle und staatliche Beihilfen
Jens Hölscher
Wirtschaftsdienst,
No. 5,
2014
Abstract
Ten years after the biggest enlargement in the history of the EU, the integration of the new member states is assessed positively. It is considered an economic success when looking at the income levels. However, due to overly optimistic assumptions and the crisis, economic integration and the catching-up process will take much longer for the new EU member states than originally expected. Moreover, new challenges are looming, especially as the Central and Eastern European accession countries adopt the euro. Smaller countries introduced the euro as quickly as possible, whereas larger countries have been much more hesitant, thinking twice not only because of several unsolved problems in the euro area but also because they use the exchange rate tool much more intensively. All new member states have to make sure they continue to increase their productivity and competitiveness. Findings suggest that after having entered the EU, the new eastern member states appear to have been developing rather stringent competition cultures. Bulgaria and Romania’s transition performance significantly differs from the pattern in the 2004 accession countries, both in terms of quantitative growth and institutional quality. These countries show that EU funds can be highly counter-productive since they help to conserve old structures.
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The New EU Countries and Euro Adoption
Hubert Gabrisch, Martina Kämpfe
Intereconomics,
No. 3,
2013
Abstract
In the new member states of the EU which have not yet adopted the euro, previous adoption strategies have come under scrutiny. The spillovers and contagion from the global financial crisis revealed a new threat to the countries’ real convergence goal, namely considerable vulnerability to the transmission of financial instability to the real economy. This paper demonstrates the existence of extreme risks for real convergence and argues in favour of a new adoption strategy which does not announce a target date for the currency changeover and which allows for more flexible and countercyclical monetary, fiscal and wage policies.
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Independent State Aid Control in the Enlarged European Union
Jens Hölscher, Nicole Nulsch, Johannes Stephan
Unabhängige staatliche Organisationen in der Demokratie. Schriften des Vereins für Socialpolitik Bd. 337,
2013
Abstract
State aid and its control within the European Union have a long and controversial history. This study looks at the effects and implications of the independence of state aid control arising with the Eastern enlargement process of the EU. Qualitative analysis in case studies is used to supplement a quantitative description of state aid levels in East and West. Findings suggest that in recent years a level playing field across the EU has indeed emerged. In fact, the most pronounced differences in this respect are not observed between CEECs and the EU-15 but rather between Northern and Southern member states. However, the strong and independent status of the EU Commissioner from national influence could be shown clearly – apart from some exceptions.
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