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.
German economy under pressure

The economy in Germany deviated from its growth course in the spring of 2019. Between April and June, economic output fell slightly by 0.1 percent compared with the previous quarter. At the beginning of the year, growth was still 0.4 percent. The decisive factor was the international burdens, which were mainly affecting German industry. The Federal Statistical Office reported that German exports fell more sharply than imports in the past quarter, which slowed the economy. In addition, construction investments declined, but this was mainly due to a special statistical effect. Overall, the construction industry continues to perform well and is supporting economic development. In the past quarter, positive impetus came from private consumer spending, which continued to grow. With high employment and rising incomes, the environment for consumption remains favorable. The state has also increased its consumer spending. Despite the uncertain global situation, companies increased their capital expenditure. This shows…

Inconsistency needs composure

US trade policy appears to be dominated by sentiment and electoral considerations and is characterised by a high degree of volatility. Within a few days, US President Trump announced tariffs of 10% on a volume of 300 billion US dollars and then partially postponed them again. To make matters worse, there was actually no reliable justification for either action. They appear to the observer as completely arbitrary actions of the US government or the president himself. The financial markets, especially the stock markets, have reacted violently to both announcements. However, nothing should be interpreted into these movements. The economic outlook will not be changed by these erratic actions. However, the reluctance of companies to invest is likely to increase even further, as uncertainty about the further development of the trade conflict should deepen. However, weak investment and stagnating world trade are the main reasons for the slowdown in growth momentum….

German housing market: Prices are rising rapidly nationwide, high level in metropolises is slowing down

Prices on the German housing market continue to rise briskly. Since the end of 2017, residential property prices in Germany have risen by around 7% a year. The price increase in this order of magnitude also failed to materialise in mid-2019. The price index just published by the Association of German Pfandbrief Banks (vdp) showed a growth rate of 7.3% year-on-year at the end of the second quarter. This means that the expected slowdown in inflation has failed to materialise. However, last year’s forecast was based on the turnaround in interest rates that was becoming apparent at the time. Instead, mortgage interest rates continued to fall – as a result of the slowdown in the European economy and the weak inflation trend. The average interest rate calculated by the Bundesbank for housing loans in new business fell to 1.57%, the lowest level to date. This means that the purchase of…

More savings in Germany

The environment for private household investment in Germany remains difficult. While the ECB’s announcement in September last year that it would phase out its net bond purchases in stages still raised hopes that the low-interest phase would subside, these hopes evaporated again at the turn of the year. With the slowdown in economic growth in Germany and Europe and the intensification of the trade conflict between the USA and China, monetary policy normalization receded into the distance. The average current yield on fixed-interest securities has been falling for months – with a negative sign since June. While expansive monetary policy and low interest rates are pushing up demand for equities as an investment alternative, trade disputes and a gloomy economic outlook are weighing on the sales and earnings prospects of listed companies. This limits price potential and increases volatility. In the first quarter of the current year, private households once…

Japan: surprisingly high economic growth in spring

Japan’s latest macroeconomic growth figures are unexpectedly positive: In the second quarter, the economy grew by 0.4% compared with the previous quarter, which in turn has been revised upwards again from 0.5% to 0.7% (Q/Q). This came as a surprise after most sentiment indicators such as the consumer climate and the sentiment among companies measured in the central bank’s Tankan Index had recently been on a continued downward trend. Nonetheless, consumption increased by as much as 0.6% (Q/Q) in the second quarter, and investment activity was not so bad either: gross fixed capital formation grew by 1.2% (Q/Q). After all, the state also increased its consumer and investment spending somewhat in the past quarter, thus contributing to the surprisingly high overall growth before the middle of the year. However, foreign trade cost some growth overall. Exports fell slightly in terms of volume; however, the fact that there was „only“ a…

Italy: Investors turn away

The Italian government is on the verge of collapse. After weeks of quarrels, Interior Minister Salvini yesterday called for new elections, effectively announcing the end of the coalition between the Lega and the Five-Star Movement (M5S). The latest dispute was triggered by the M5S’s decision not to approve the major TAV railway project. In the meantime, Prime Minister Conte has announced that he will ask Parliament the question of confidence, which he is very likely to lose. If the end of the coalition is officially confirmed, President Mattarella has the ball rolling. He must officially sound out possibilities for forming a new government or otherwise declare new elections. Since new majority constellations in parliament, such as an alliance between PD (centre-left) and M5S, are unlikely, new elections in mid-October are already being discussed. Until the ballot, the president could set up an expert government that would run the business, but…