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.
Austria: weak growth and high need for reform

The Austrian economy hardly grew at all in the second and third quarters of 2019. The main reason for this is the weakness of industry, which depends to a large extent on the less dynamic German economy. A weak export business and a high degree of uncertainty caused by the international trade conflicts and political risks obviously leave their mark on economic growth. The service sector was able to achieve a solid increase in value added despite the deterioration in sentiment. The picture is unlikely to change much in the near future. The mood in the manufacturing sector is still noticeably depressed, but at least there is hope for a gradual stabilization of the industrial economy. By contrast, the services sector is likely to maintain its growth course. It could, for example, benefit from the good labour market situation and a strong tourism sector. Only in the course of the…

Small and medium-sized businesses feel the effects of economic slowdown

The clouding over of the German economy has now also reached SMEs. This is shown by the results of the new SME study by DZ Bank and BVR. Business expectations have plummeted compared with the spring: The balance of expectations fell from 24.1 points in spring to only 0.4 points. This means that the optimistic and pessimistic business prospects of the medium-sized companies surveyed are now almost in balance. The assessment of the business situation did not decline so significantly. However, it fell for the third time in a row. SMEs in export-oriented industrial sectors in particular assessed their business situation significantly weaker than six months ago. The main reason for the current deterioration in sentiment is the consequences of the global economic slowdown. These also ensured that SMEs reduced their foreign commitments for the third time in succession. Nevertheless, more than half of them are still active abroad, which…

Economic slowdown reaches banks‘ lending business in Germany

The economic slowdown in Germany has now also reached the lending business. The extremely dynamic growth of banks‘ customer loans has slowed recently. From the end of September 2018 to the end of September 2019, loans to companies, private households and the state rose by 4.0 percent to EUR 2,928.2 billion. The strongest growth was again recorded in corporate loans. However, the increase slowed compared to the middle of the year. On the other hand, growth in private housing loans remained stable at a high level. The economic environment, which is characterised by a weakening industry, but a persistently good construction sector, is also reflected in the expectations of banks for the coming months. Most of them expect demand for corporate loans to fall and are planning to tighten their credit guidelines for these customers. The banks are more optimistic about the demand for credit from private households, for whom…

Turkey: path of economic recovery marked by risks

The good news first of all: the Turkish economy is on the road to recovery after last year’s economic crisis. Survey-based leading indicators indicate that it has now bottomed out. The low level of inflation compared to the autumn of last year and the interest rate cuts have obviously given businesses and consumers back some confidence. This has also had a positive impact on growth figures. Since the beginning of the year, Turkey’s economic performance has picked up surprisingly quickly. However – and this is the bad news – the pace of growth has now slowed noticeably again. In the third quarter, Turkey’s gross domestic product increased by only 0.4% compared with the previous quarter. Between April and June, the rate was even stronger at 1.0%. The Turkish economy is therefore not on a very steep, but rather a very bumpy recovery path. Economic growth could weaken further in the…

Central banks need relief

At the latest since the ECB’s latest loosening package in September, the limits of monetary policy have been the subject of renewed discussion. Because the lower interest rates slide into the red, the more questionable the positive real effects on the economy that the central bank expects them to have. At the same time, the risks to financial stability are increasing, whether due to excessive indebtedness or price exaggerations on the stock, bond or real estate markets. But the financial markets have long since adjusted to the overabundant supply of liquidity. The hunt for returns leads to increasingly risky investments. And an excessive indebtedness does not seem to represent a large risk with a zero or negative interest rate first of all. This makes it all the more difficult for central banks to get out of low interest rates. In order to make their task easier for the central banks,…

US economy benefits from rising debt, an example for other countries?

A heated debate has flared up in Germany about the usefulness of the debt brake. The current regulation actually offers the government enough flexibility, but they don’t want to take advantage of it. In the USA, on the other hand, the path is completely different, which has led to a significant increase in the deficit in the state budget. In particular, tax cuts and rising social costs have significantly widened the gap in the US federal budget. Above all, the financial relief for companies and private households has provided positive economic impulses. According to estimates, the tax cuts by the Trump government have relieved companies by around USD 80 billion and private households by around USD 120 billion. This alone should have contributed to growth of around 0.7 percentage points. With expected GDP growth of 2.3% yoy in 2019, this is a not inconsiderable contribution. Whether planned or not, with…