Mario Krivokapic’s Post

??️ *Storm Clouds Over Germany’s Economy: A Brewing Storm or Just Dark Clouds?* ?? German consumers have caught the pessimism bug from businesses. They’re both donning darker shades of negativity, reflecting their skepticism about an imminent economic rebound. Dare I say, it looks like the German economy might be spiraling into a Kafkaesque nightmare! *What’s driving this gloom? Let’s dish it out:* 1. **Political Paralysis:** Just like in a tragic play, political discord is stymieing proactive policies that could provide much-needed buoyancy. 2. **Energy Crisis:** As the energy crunch continues, industrial output shivers. Dependency on uncertain supplies? Not exactly a fairy tale. 3. **Inflation Inferno:** With the inflation dragon breathing fire, purchasing power is set aflame, leading wallets and bank accounts to cry for mercy. Slow recovery post-pandemic was a given, but now we’re facing a combo of deterioration, disaster, and despair. Could the pillars of Europe’s stronghold economy be crumbling like a sandcastle at high tide? I wouldn’t count on that German efficiency for a quick turnaround this time. It’s high time businesses channel their inner MacGyver. To navigate this labyrinth of challenges, entrepreneurial ingenuity and grit are the best weapons. Call me cynical, but if things don’t change soon, we might be witnessing the German economy waltzing its way straight into recession. Amidst such gnarly vibes, proactive foresightedness will differentiate the survivors from the pack. Hopefully, we’ll see tactical resilience by businesses and consumers alike. Yet remember, after winter, comes the spring. The German economy has historically rebounded from derailing rough patches. So perhaps, there's a silver lining. But fans of Schadenfreude, don't rejoice too early. https://lnkd.in/emdgfXDV

✅ Which countries have the biggest downside in 2024? ✅ One of the reasons why Germans on average are so poor is that they are hardly in a position to increase their standard of living with the help of housing leverage, nor do they benefit from assets inflation to build financial wealth. The median wealth in Germany is USD 35,313 versus USD 94,079 for Austria or USD 227,891 for Switzerland . The average (not median) income in Germany is 27,416 Euros per year (=2284 Euros per month). From a net income of 44,407 euros per year (=3,700 euros per month), you already belong to the top ten per cent in Germany. Can you imagine that? To put it another way: What is considered a retail client in Switzerland could considered a UHNWI in Germany. For the average German, there is not much of a buffer if there is a prolonged economic recession. This recession has already begun. At the same time, the government's hands are tied. It is a structural downfall because Germany's business model is based on cheap energy resources and globalisation. Both of these cornerstones have now disappeared. The social-industrial complex accounts for 40% of German GDP. In other words, there are a handful of Über-productive firms in the manufacturing sector that contribute disproportionately to sustainable GDP growth. But numerous companies in manufacturing have already given up. There will be many more company bankruptcies and redundancies this year. So how will the anticipated social tensions be dealt with in 2024 / 2025? Will we experience a Weimar 2.0 in Germany? #inflation #generationalwealth #ww3 #noplacetohide

The latest from the Globe and Mail's business commentary, by Eric Reguly: Germany is stumbling into recession. Angela Merkel’s dubious economic policies, inherited by Olaf Scholz, are to blame. Germany is on course to become the only G7 economy to shrink this year as data points to a recession in the country.

#Allianz weekly is out. Amongst the topics, we put out our thoughts on the #Fed's financial operating losses which are starting to be very large. Of course, projecting the Fed's future losses is a tricky exercice since many assumptions have to be made, not least on when the Fed will stop running down its (still) bloated balance sheet, ie stop with #quantitativeTighetening(QT), and the future level of interest rates. Under our assumptions - Fed stops QT at the end of Q2 2024 and starts to cut rates down to 4.25% (upper range) by December 2024 and 3.25% by December 2025 - we estimate the Fed’s cumulative losses will keep increasing until the middle of 2025 to around #USD186bn, or 2.8% of the Fed’s assets, before slowly reducing thereafter as the Fed starts to make profits again. Under an alternative scenario where the Fed keeps interest rates higher for longer, we estimate that the Fed's cumulative losses would keep increasing by the end of 2025, to around USD225bn. --> Large cumulative losses can be problematic for the Fed: this is because the Fed creates #bankreserves to cover operating losses, that is #centralbank money, which are in principle #inflationary. Large losses can thus go against the Fed’s goal of price stability ultimately.  --> In all we think, that IF inflation does subside (ie normalize close to the Fed's 2%targret) there is strong incentive for the Fed to start cutting rates in 2024.

Germany Braces for Economic Storm: Recession Looms As the calm before the storm settles over Germany, initial figures from the labor market appear unremarkable at the start of the year. A slight uptick, attributed to the seasonal norms of the job market structure, fails to mask the deeper woes concealed beneath the veneer of political media narratives. For two years, the economy has languished in recession, hemorrhaging €135 billion in direct investments annually, while inflation rears its head in certain regions. Bavaria, for instance, witnesses a month-on-month inflation spike of 0.5%, hinting at a potential 6% annual surge. The European Central Bank's monetary policies, compelled to finance the mounting deficits of Eurozone members, are poised to manifest in Germany's commodity prices. Consumers, already burdened with exorbitant electricity bills post the destruction of the German energy sector, face grim prospects in offsetting the impending inflationary blow. An intriguing observation arises: amidst purported near-full employment, why do social budgets swell to over €50 billion this year? Who are these invisible entities absent from the labor market statistics? Questions abound, yet Germans are renowned for their astute responses. #Germany #recession #jobmarket #Europe

🇩🇪 #Germany needs more than a plan. 📉 Germany is the only major economy that looks set to contract in 2023 as it battles headwinds such as slowing demand for its exports, higher exposure to the industry slowdown in the US and China and an inventory correction. 🔍 While the government's recently announced 10-point economic plan is a step in the right direction, and will give growth a small boost, it is too small to restructure a EUR4trn economy. 🤝 Germany struggles with several structural challenges, including labor shortages, high energy costs and slow digitization. To address these, Germany needs measures that strengthen its position as a place to innovate, invest and create high-value jobs. But companies also need to do their part: Transformation requires collaboration between the government and the private sector. 🌎 Also this week, we look at why the US Fed's huge financial losses matter, what to expect from the next Bank of England meeting and the results of the Allianz Pulse survey. Read the full report here: https://ow.ly/J9Sk50PLtic #Economy #Economics #Fed #BoE Ludovic Subran Ana BOATA Maxime Darmet-Cucchiarini Dr. Jasmin Gröschl Arne Holzhausen

🇩🇪: Does #Germany’s #economy need more than a #cup of #coffee? -This week, it was confirmed that Europe's biggest economy shrank by 0.3% last year :-Whilst the country avoided recession - thanks to a statistical quirk - most economists think Germany will be in that position when the numbers for the first part of this year are published :-Germany's growth is being held back by the twin shocks of ~ the energy crisis, caused by the war in Ukraine, and ~ higher interest rates :-also long-term structural issues such as ~ ageing infrastructure, ~ a labour shortage and ~ the cost of tackling climate change -finance minister Christian Lindner: :-After very successful periods since 2012 and these years of crisis, :-Germany is a tired man after a short night, and the :-low growth expectations are probably a wake up call :-now, we have a good cup of coffee, which means structural reforms, and then we will be continuing to succeed economically -Mrs Verena Pausder chair of the German Start-up Association: :-change in mindset needed :-we're really good at kind of listing all the negative stuff and what we're not good at :-forgetting is what we actually get done ~ despite the downturn there were still 2,489 start-ups founded last year ~ Younger generations are more willing to take risks ~ But Germany's pension funds - which are worth more than $700bn - "are not allowed to invest into asset classes like venture capital and private equity -Mr Moritz Schularick thinks the move away from cheap Russian energy is less of a challenge that the long term issues -SAP's Christian Klein: :-If Germany's economy is to return to growth innovation will be crucial Text by Jonathan Josephs & Jessica Parker in BBC Link: https://lnkd.in/eUY47SYj

The FT writes, German business leaders are sounding the alarm over the country's economic outlook. Virtually “every European economy is growing, apart from Germany’s”, says Rainer Dulger, head of the BDA, the country’s main employers’ organisation. “That’s a clear signal we have to act.” The ECB tightening monetary policy to tackle inflation has also taken its toll, as has a sluggish recovery in trade with China, Berlin’s biggest trading partner. Robert Habeck, economy minister, admitted earlier this month that Germany was emerging from the crisis “more slowly than we expected”. Many of the challenges the country faces are long-term. Companies increasingly complain about the rising cost of doing business—the burden of climate policies, high taxes and expensive energy. They also point to the dire shortage of skilled workers and excessive bureaucracy. Meanwhile the rise of EVs—and China’s advances in the EV market in Europe—threaten an industry that was long a pillar of Germany’s economic success. Nowhere is this process more evident than in the district of southwestern Germany where a clutch of medium-sized engineering companies are based. A recent survey by IW Consult identified Donnersbergkreis as one of the most challenged regions in Germany. Ford said last year it would stop building cars at the plant in Donnersbergkreis and construct its next generation EVs in the Spanish city of Valencia instead. This month it announced that talks to sell the factory to a big unnamed investor had failed. More than 3,000 jobs are at risk. It’s not just energy-intensive industries that are suffering—the slump in Germany’s construction sector is also being felt in Donnersbergkreis. Construction have been hammered by high interest rates and a big increase in the cost of building materials. A survey by the Ifo Institute found 21.4% of residential builders were affected by project cancellations in September, the highest level since records began in 1991. 🇩🇪 👀 #germany #energytransition #energy

Germany’s rebound from the triple shocks of the first half of the 20th century – the collapse of the currency in 1923, the Great Depression and defeat in the Second World War – was remarkable. So spectacular was the recovery in the 1950s and 60s that a word was coined to describe it: Wirtschaftswunder – or economic miracle. That economic miracle is now in trouble. Nowhere near as much as it was 100 years ago, but the war in Ukraine, slower growth in China and the retreat from globalisation have taken a toll. Germany has deeper problems too: an ageing population and an industrial model showing its age. Evidence that Germany might be an analogue economy struggling to make the transition to a digital age comes from the latest manufacturing data. Industrial production has fallen for five months and is more than 7% below its pre-pandemic levels. The International Monetary Fund expects Germany to be the weakest economy in the G7 group of leading rich nations this year, and the only one to see output fall. #economy #investments #finance #future #europe #internationalbusiness https://lnkd.in/d9S_mqUD

📈 𝗞𝗶𝗲𝗹 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗲 𝗦𝘂𝗺𝗺𝗲𝗿 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁: 𝗦𝗼𝗺𝗲 𝗟𝗶𝗴𝗵𝘁 𝗮𝘁 𝘁𝗵𝗲 𝗘𝗻𝗱 𝗼𝗳 𝘁𝗵𝗲 𝗥𝗲𝗰𝗲𝘀𝘀𝗶𝗼𝗻 𝗧𝘂𝗻𝗻𝗲𝗹 According to the Kiel Institute's summer forecast, Germany is experiencing a moderate economic recovery. Economic output is expected to grow by 0.2 percent in the current year (spring forecast: 0.1 percent). The upturn will be driven primarily by a recovery in exports and consumption. However, there are no signs of strong economic momentum. The Kiel Institute expects growth of 1.1 percent in 2025 (spring forecast: 1.2 percent). The inflation rate is expected to level off at around 2 percent and the labor market will remain largely robust. "There is light at the end of the recession tunnel. There are increasing signs that the German economy leaves the economic slump behind. The interest rate turnaround heralded by the European Central Bank (ECB) is an important step in this direction," says Moritz Schularick, President of the Kiel Institute. "The picture of a sluggish recovery is taking shape. After exports, domestic consumption is about to pick up as the year progresses. However, business investment and residential construction remain weak for the time being. Overall, the nascent upswing is gaining little momentum, like a soccer team struggling to advance after a long defensive battle," says 𝗦𝘁𝗲𝗳𝗮𝗻 𝗞𝗼𝗼𝘁𝗵𝘀, Head of Forecasting at the Kiel Institute. All Details 👉 https://lnkd.in/eXztqity