Economy

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…

Industry continues to weigh on the mood of purchasing managers in the euro zone

  The data from IHS Markit’s November survey of European purchasing managers certainly does not indicate a mood of optimism. The comprehensive composite index fell by 0.3 points to 50.3 index points. Although the index for industry was able to gain, at 46.6 points it remained well below the neutral mark of 50 points. Industry is still suffering from declining demand, especially from abroad. However, the service sector, which is still growing, is increasingly threatened by the ongoing crisis in the industry. Here, employment intentions hardly increased at all. At 49.2 points, the German composite index remained below the neutral mark of 50 index points despite an improvement of 0.3 points. The mood among service providers declined slightly and was lower than it had been for more than three years. By contrast, the industrial index rose. Nevertheless, at 43.8 points, the index for industry remains below the growth threshold of…

Chemicals sector continues downward trend

The export burden of the German economy has become a problem in recent months. Even the local chemical industry cannot escape this problem due to its high dependence on foreign markets. After incoming orders had already fallen by more than 1% in 2018, the first nine months of this year saw a further sharp decline. In view of this development, it is not surprising that production in the industry also had to be cut back significantly: in the period from January to September it fell by 3.2% compared with the same period of the previous year. Capacity utilization at German chemical companies also tended to decline slightly last year. However, the decline was much more pronounced this year. Current capacity utilization, for example, is just over 80%; an even lower figure was recorded in the first quarter of 2010. Order backlogs were somewhat more positive, averaging the previous year’s level…

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