14.12.2016 • 50/2016
The German Economy: Economic Activity Spurred by Private Consumption and Construction
German economic activity remains robust due to strong domestic demand. IWH forecasts gross domestic product (GDP) to increase by 1.3% in 2017. The growth rate is half a percentage point lower than in 2016 due to calendar effects and a negative contribution of external trade. Consumer price inflation also remains modest (1.3%). “Unemployment is expected to increase slightly due to a protracted integration of refugees into the labor market”, says Oliver Holtemöller, Head of the Department Macroeconomics and IWH vice president
Oliver Holtemöller
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Mapping Potentials for Input-Output Based Innovation Flows in Industrial Clusters – An Application to Germany
Matthias Brachert, Hans-Ulrich Brautzsch, Mirko Titze
Economic Systems Research,
No. 4,
2016
Abstract
Our paper pursues two aims: first, it presents an approach based on input–output innovation flow matrices to study intersectoral innovation flows within industrial clusters. Second, we apply this approach to the identification of structural weaknesses in East Germany relative to the western part of the country. The case of East Germany forms an interesting subject because while its convergence process after unification began promisingly in the first half of the 1990s, convergence has since slowed down. The existing gap can now be traced mainly to structural weaknesses in the East German economy, such as the absence of strong industrial cluster structures. With this in mind, we investigate whether East Germany does in fact reveal the abovementioned structural weaknesses. Does East Germany possess fewer industrial clusters? Are they less connected? Does East Germany lack specific clusters that are also important for the non-clustered part of the economy?
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German Economy on Track — Economic Policy Needs to Be Realigned
Roland Döhrn, Ferdinand Fichtner, Oliver Holtemöller, Stefan Kooths, Timo Wollmershäuser
Wirtschaftsdienst,
No. 10,
2016
Abstract
The German economy is experiencing a moderate recovery: GDP is expected to grow by 1.9 percent this year, 1.4 percent next year, and 1.6 percent in 2018. Over the course of the forecast period, capacity utilisation will be somewhat higher than in the longterm average. Nevertheless, the contribution of corporate investment to the current upswing is minimal. The global economy is generating only minor stimulating effects, which means that exports are increasing only moderately. The extremely low long-term interest rates are likely to reflect not only the current monetary policy, but also low growth expectations. All of these factors are inhibiting investment into equipment, and thus, consumption continues to be the main growth driver. Private consumption is benefiting from the sustained increase in employment; the high expenditures for accommodating and integrating the refugees is still having a strong impact on public spending. Residential construction is getting a boost from the low interest rates.
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Direct and Indirect Effects of Economic Sanctions between the EU and Russia on Output and Employment in the German Economy
Jutta Günther, Maria Kristalova, Udo Ludwig
Russland-Analysen,
No. 325,
2016
Abstract
Followed by the escalation of the Ukraine conflict in 2014, the European Union and Russia introduced bilateral economic sanctions which accelerated an already existing decline of the German exports to Russia. The article focuses on the effects of the losses in exports to Russia on production and employment in Germany. The analysis makes use of an input-output approach capturing direct as well as indirect effects throughout the supply chain. The results calculated on the base of the actual Input-Output Table for Germany exhibit a cumulated loss in GDP of 0.15% due to sanctions in the years 2014 to 2016. Especially export-oriented German sectors with strong backward linkages, such as motor vehicles and machinery, are affected.
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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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International Banking and Cross-border Effects of Regulation: Lessons from Germany
Jana Ohls, Markus Pramor, Lena Tonzer
Abstract
We analyze the inward and outward transmission of regulatory changes through German banks’ (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments, these spillovers are however quite heterogeneous between types of banks and can only be observed for some instruments. For instance, foreign banks located in Germany reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements and loan to value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements was effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions.
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09.09.2016 • 38/2016
The Perception of Financial Inferiority Nurtures Negative Attitudes Towards Foreigners
When people feel that their own economic status is inferior to the economic status of a relevant peer group, it becomes more likely that they develop negative attitudes towards foreigners. This link was found in a new study of the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association. The effect is particularly strong with respect to foreigners from low-wage countries.
Walter Hyll
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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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11.08.2016 • 34/2016
2016 stress tests: Italian banks don’t look worse than German large commercial banks
The European Banking Authority today presented the results of the 2016 stress tests. They show that most European banks appear more or less stable. “What worries me is, however, that the Italian banks do not look worse than the large German commercial banks,” says Reint E. Gropp, president of the Halle Institute for Economic Research (IWH). “It appears that both Deutsche Bank and Commerzbank would benefit significantly from an increase in equity. The stress test was also missing two crucial points: One, the effect of a long lasting low interest rate environment on banks was not simulated. And second, the test did not take into consideration that many small institutions could fail at the same time. This is not an unlikely scenario, given how small banks in particular struggle with shrinking interest margins,“ says Gropp. Finally, the stress test should not distract from the urgency to solve the problems in the Italian banking system.
Reint E. Gropp
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Effects of Sanctions between the EU and Russia on the German Economy
Jutta Günther, Maria Kristalova, Udo Ludwig
Wirtschaftsdienst,
No. 7,
2016
Abstract
The mutual imposition of economic sanctions strengthened the slow down of German exports to Russia and exposed output as well as jobs inside the value chains to danger. The amount of potential losses is estimated by the the use of input-output-analysis.
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