Bielmeiers Blog

DZ BANK

Selecting business news – analysing it – commenting on it. That’s the job of Stefan Bielmeier, Chief Economist and Head of DZ BANK’s Research and Economics Division, and of his team of analysts. In his blog, Bielmeier reports on economic developments in the world's most important economic regions, looks at trends in the international financial markets and states his position on current political events.

Bielmeier’s Blog picks out the essence of the daily data deluge for you – make use of his expert knowledge.
Corona – from epidemic to pandemic

The corona virus and its recent rapid spread across the globe bring much suffering to the people affected. According to current knowledge, about 20% of those affected can expect a severe course of the disease, 5% die on average. The financial markets reacted in their own way. The stock markets fell sharply in the course of the week. Investors‘ economic and profit expectations are coming under increasing pressure due to the rapid spread of the disease. If the disease spreads to become a serious pandemic, with heavy strain on supply chains, global growth is likely to come close to stagnation. Export-oriented countries would be hit harder than domestically oriented economic models. We are not there yet, but the world has come a few steps closer to this scenario in the course of this week. Already now, the real economic data is likely to have a significant negative impact. At best,…

The virus and its spread

The further course of the corona epidemic cannot really be predicted even by medical experts. On the one hand, the declining number of new infections in China in recent days has provided some relief at times, even if the influence of the different diagnostic methods is difficult to see through. On the other hand, South Korea now seems to have registered the first major corona outbreak outside China, which could increase nervousness again. It is clear that the economic consequences of the corona epidemic will be considerable. This is true even if the disease is now actually on the retreat and a broad all-clear can be given in the first quarter. After all, the economic damage caused by the loss of production in factories, by disruption of supply chains, by limited consumption opportunities and by the loss of travel is already considerable, especially for China and the countries bordering on…

EU budget: Blockade instead of progress

In the dispute over the EU’s future multiannual financial framework (MFF), an agreement is now finally to be reached. This is long overdue, as the current MFF expires at the end of this year. The current President of the European Council, Charles Michel, has now pulled the emergency brake and called an extraordinary summit on 20 February. In view of a number of points of contention between the Member States, there is no prospect of a rapid agreement. The brexite is creating a billion-euro shortfall on the revenue side. There are therefore massive differences of opinion about the amount of the future EU budget. However, positions also differ widely on the planned use of the money: while the net contributors to the EU want to prevent additional expenditure, the net recipients are blocking cuts in agricultural and structural aid. The challenges on the expenditure side are greater than ever before,…

China: The economy in times of the corona virus

One of the most pressing economic questions at the moment is certainly how much Chinese economic growth will be slowed down by the corona crisis. China is still in a state of emergency. Public life is still lying idle in large parts of the country, and the start of production in industry has been extremely slow after the extended New Year break. Many migrant workers are struggling to return from the Chinese hinterland to the production facilities on the east coast, and when they arrive there, they are usually threatened with a two-week quarantine. There are currently hardly any reliable economic figures that would allow the extent of the economic damage to be reliably quantified. The few indicators that are available (daily passenger numbers, apartment sales or weekly coal consumption) suggest, however, that the giant tanker China is currently travelling at half speed at best. Inevitably, the depth of the…

Machine tool construction under pressure

  Given the weakness of world trade, machine tool manufacturers have come under increasing pressure in recent months. Order intake in 2019, adjusted for prices, fell by 19 percent year-on-year. The decline in new orders, which began to accelerate in March, initially had relatively little impact on production. Gradually, however, the order backlogs were increasingly worked off, with the result that capacity utilisation fell well below its long-term average. At the beginning of last year, the time taken to process the order backlog was still more than five months. At the beginning of 2020 it was only 3.9 months. Production and exports have also fallen at an above-average rate recently. With its barely standardized products, machine tool manufacturing is one of the industries lagging behind the economy, not least because of the time required between order intake and completion. Analogous to the mechanical engineering industry as a whole, machine tool…

USA: Uncertainty about future economic policy slows down investment dynamics

The economic momentum in the USA remains intact. This is indicated by the good mood in the economy and among consumers, as well as the strong increase in employment, which became apparent at the beginning of the year. However, the presidential and congressional elections due in November will have a dampening effect on investment in machinery and other equipment. Last year, investment had already shown only modest growth, and in 2018 the reduction in corporate tax had only kindled a flash in the pan. This year, the unclear further course of financial and economic policy, but also the smouldering trade conflicts, should prevent a visible upturn in corporate investment, despite solid domestic demand. The election results of 3 November, for example, may continue to cause a standstill in urgently needed investment in public infrastructure. A turnaround in fiscal and environmental policies could also be the result. The latter would be…