There is no ray of optimism, but the majority of sectors of the German economy can look confidently to 2019 – although not everywhere, better business is expected.
“It is a somewhat contradictory picture,” says Michael Hüther, the Director of the Institute of the German economy (IW), the results of the current Association survey of his house, which is regularly published shortly before the turn of the Year. “On the one hand, we are witnessing a decline in Confidence. Only seven sectors of the 48 respondents say they see a more optimistic view of the future than twelve months ago. A year ago there were 26 sectors.” There’s a loss of Confidence was palpable, Hüther, compared to the DW.
At the same time, the Economist stresses, however, that this assessment was a harbinger of a recession. The plans of the companies of investments and the build-up of staff remained stable. “The whole event is something the air. There is more Sand in the gearbox, how we feel from day to day, but it is not a crash.”
Slowdown In The Global Economy
The IW Association survey makes it clear that industry, in particular, must in the course of the year 2018 springs. This was due in part to the slowing economy, in contrast to in 2017, with a dampening effect on the export-heavy industry-impact sectors in Germany. The level of exports was, and is still high, it’s the extra momentum was missing this year.
Added to this were the problems in the auto industry. Delays in a new test methods have led to Production declines, which were also in other areas, such as the metal and chemical industry.
A currently worse position than a year ago, was also in the areas of financing, Leasing and banks. Worse, the current Situation is assessed of the German farmers ‘ Association, which is newly represented in the IW Association survey – the effects of the long hot summer let greet.
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Michael Hüther on the IW Association survey of 2019 – MP3-Stereo
Upward trend continues
Compared to the almost euphoric mood of the year 2017/18, the business climate becomes harsher, the upward trend is weakening, but he continues.
“Considering how long this recovery is already in progress, since 2011, you can also expect now a correction phase, as we expect that in the usual sequence of four to five years, in a cyclical movement, in fact,” says IW chief huether. Measured it, it was amazing that this stop to the underlying Trend, albeit at a lower level. “We have a good competitive core with its service additions. And not only – as before – on the export markets, it also appears on the domestic and employment markets.”
IW Director Michael huether
In this image fits that of the industrial companies in the glass and food industry there is a currently a better situation than a year ago. The same can report to the construction industry. In the hospitality sector has improved the business situation in the course of this year. This fits in with the current economic scheme: While the protectionism pushed the world economy dampens the mood in the export-oriented industry, that will benefit both the construction industry and consumer-related sectors of the robust domestic economy.
Trump and Brexit risks
“If Trump’s Vision of a world of individual deals, instead of a rule-based multilateral order,” says Michael Hüther, “then this has lasting consequences for the international German Economy.” Also the feared uncontrolled exit of the British from the European Union and the associated consequences for the German economy to the Economists.
As a big Plus Hüther sees, however, the continued stable investment readiness of the companies and thus closely related – the stable, partly even still expansionary labour market. “You need to invest in human capital, in knowledge, in people, in the face of demographic change. The ageing of the workforce is tangible.”
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Economy German economy in reverse gear
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Economy German economy in reverse gear