Home Breaking Neither Trump nor Brexit can stop Germany's recovery

Neither Trump nor Brexit can stop Germany's recovery

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Whatever future federal government will look like, it can set itself on best starting conditions – at least as far as economic conditions are concerned. According to WELT, five leading economic research institutes expect upswing to continue in coming year and next year. On Thursday of this week y present ir prognosis, so-called community diagnosis. Two weeks later, current federal government presents its foresight.

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The economic experts from DIW, Ifo, IfW, IWH and RWI assume that risks to economy have declined somewhat during course of this year. "The upturn is on a solid foot," institutes summarize. "The situation has brightened in comparison to spring," it says.

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In April, y had predicted a gross domestic product (GDP) for this year, rate of production of goods and services in Germany after deduction of all inputs, of 1.5 percent. And since 2017 has fewer working days than an average year because of location of holidays, GDP would have reached 1.9 percent. For 2018, an increase of 2.0 percent was projected again.

nCurrent rise n

Now, according to economic experts, GDP growth is expected to be noticeably above last forecast. This would lead economic recovery to its eighth year and continue. GDP grew by 1.9 percent last year, ahead of this by 1.7 percent and 2013 by only 0.5 percent. The growth figures are modest, but for economy as a whole, and especially for employees, a constant, although undramatically high, increase is better than strong growth, which usually follows a marked flattening.

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Continuous developments make it easier for companies to plan ahead. They invest more in phases and employ more employees than in periods with violent rashes. This in turn gives state more planning security.

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Economic experts point out that "economic uncertainties have declined furr." US President Donald Trump has so far not been able to assert his announced protectionist course. Import duties and a higher taxation of German goods upon import into United States could have made German economy very sensitive.

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Instead, it was seen that US president had almost failed with all major political projects and that he could implement a policy of foreclosure at earliest at end of his term – if at all. The downside of this development is that Trump has not been able to implement its announced, billiard-heavy investment program. And German economy could also benefit from this. In this context, institutes speak of an "upside risk" which has a dampening effect.

nThe Brexit is probably not yet effective

This can not slow overall positive trend. The second big challenge for German politics and economy, withdrawal of British from European Union (EU), is now more relaxed. They assume that re will be no brexit for time being, which will change somewhat in status quo of relations between United Kingdom and EU. There was a likelihood that a contract with Brussels would be concluded, even in case of a formal withdrawal from British, which would continue actual situation in bilateral economic relations.

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This would give both parties time to negotiate complex unbundling. By 2019, according to economists, this should not be done to degree that a complete withdrawal of British with all consequences could be poured into contracts. In addition, possibility is not off table that this or a coming government puts an exit from Brexit on agenda and enforces. Even if it came to a "hard brexit", most likely to have up to 2019 has no adverse consequences for German economy.

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According to economic experts, growth will be mainly due to furr increase in exports. The export motor of Germany continues to operate unchecked, especially business with emerging markets will thus noticeably tighten. For a long time, only China, as a pillar and a steadily growing market, remained of four hopefuls of world economy, BRIC countries (Brazil, Russia, India and China). Meanwhile, China is no longer as it has been in recent years, but South America and Russia are recovering more and more, and India is becoming increasingly important as a sales region. The good economic development of most countries in Europe continues to fuel German exports. Countries like Spain and Italy, for example, have stabilized despite all remaining problems.

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The Germans, on or hand, are no longer great driver of growth. The continued decline in unemployment and recent good wage agreements in many sectors are making sure that desire to buy is not diminishing. But it is no longer as in past few years. It was above all domestic demand, which pushed economy strongly.

nThe Germans have been hoping for more moderate oil prices n

Among or things cheap oil price ensured that Germans of money bags loosely sat. The money saved during refueling flowed into or purchases. Oil and refore gasoline will be all more likely to remain cheap, but new methods of delivery such as fracking, which Americans put on. But oil price does not sink any more, Germans have adjusted to more moderate petrol bills and can not reby be led to more consumption.

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It was controversial among five economic institutes wher German economy would even be threatening to overheat because of long-term good development. After all, it becomes more and more difficult for companies to recruit specialists, in conurbations commercial leases are increasing. Some of experts are warning of an "overload in German economy" that it is no longer possible to produce so much to satisfy demand in Germany and abroad.

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There are signs of this. The German construction industry can no longer work flood of orders, labor market is swept as empty in some regions. But overheating also means that prices of certain goods and services are rising significantly, which is not case. The majority of economic experts refore do not see any danger – and assume best prospects.

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