(November 2012) On Wednesday Finfacts reported that German companies are expected to export goods and services worth more than €1tn in 2012. While imports will also hit a new high in 2012, the German trade surplus is forecast to hit €174bn - - a 10% increase. Our report also touched on trade with Asia where China is the only country from the region among the Germany's top 10 trading partners. Here we look at the regional and sectoral concentration of German exports.
(November 2012) In the Great Recession there have been many historic milestones; on March 05, 2009, the Bank of England cut its key benchmark rate to 0.5%, the lowest since it was founded in 1694. In recent years interest rates in many countries have been as low as at any time going back to the Babylonian Empire according to the classic 'A History of Interest Rates' by Sidney Homer, that was first published in 1963. So as the euro debt crisis continues and Ireland faces years of economic stagnation (the multinational sector will continue to provide the illusion of real growth), the current market perception of Irish risk is lower than that of the other economies which are in intensive care. While some core countries have in 2012 sold short-term debt at negative interest rates, struggling Eurozone economies are also issuing debt with shorter maturities.
(November 2012) Germany's new orders from Eurozone countries have fallen by 20% compared to the 2007 average. While the share of Germany's exports to the region has declined from 43.8% to little more than 35% during the same period, markets in emerging economies and the US have helped to offset the drop . However, both the Eurozone and the rest of the EU27 remain not only important for German exports but 65% of Germany’s foreign investments are in the EU. Only about 53% of the European Stoxx 600 companies reporting to date have managed to beat consensus EPS (earnings per share) expectations. Therefore, European weakness is increasingly being transmitted to Germany via the profit channel, too. Therefore the German economy is at a standstill in Winter 2012.
(November 2012) European Union creditors and the International Monetary Fund are feuding over a long-delayed €31.3bn aid package to Greece. Lawrence Mutkin, global head of interest rate strategy at Morgan Stanley discusses the impact of this on the Eurozone with capital markets editor Ralph Atkins.
(November 2012) Spain’s prime minister said on Tuesday that economic growth will not return until 2014. However, the European Commission is more pessimistic about growth and budget targets. Mariano Rajoy said in a radio interview that Spain’s economy will continue to shrink in 2013 but that it should return to growth in 2014.
France needs "competitiveness shock"; Hollande promises "strong decisions" but unlikely until at least 2017
(November 2012) On Monday, both a report commissioned by the French government and the report of a regular audit by the International Monetary Fund (IMF), separately called on France to implement major economic reforms. Louis Gallois, former head of European Aeronautic Defence & Space Co. (EADS -- parent of Airbus) called for a €30bn cut in social security payroll taxes - - which would be mostly paid for by tax increases on consumption -- to boost the global strength of French companies that trail Germany's powerful exporters. He called for a "competitiveness shock" while the IMF said the "the ability of the French economy to rebound is...undermined by a competitiveness problem." At a Europe-Asia summit in Vientiane, Laos, François Hollande, French president, said France will take "strong decisions" to boost competitiveness at home. Last week the Financial Times said that the French comparison often made is with reforms enacted in Germany by Gerhard Schröder. "But asked recently whether he would follow the same course, Mr Hollande pointed out that the former Social Democratic chancellor undertook his reform programme only after he had won re-election." That would see Hollande having his fingers crossed until 2017.
(November 2012) Not even one in seven people in Germany was younger than 15 years in 2010. Among all European countries, that was the smallest proportion of under 15 year olds in the total population. The number of children under the age of 18 in Germany fell to 13.1m in 2010, down 14% from 2000.
(October 2012) Germans are getting richer despite the Eurozone debt crisis, as the country benefits from a strong economy that has slowed only in recent months. Low interest rates have also helped. Private debt levels have risen only slowly.
(October 2012) In most member states of the European Union (EU), the business services industry saw little to no productivity growth in the last two decades, due to weak competition. Business services markets work best in countries with flexible regulation on employment change, low regulatory costs for firms starting up or exit a business and more openness to foreign competition. The business services industry in most EU countries has had zero productivity growth since 1980.
(October 2012) German Industry: With a slowdown in emerging economies led by China coupled with a recession in the Eurozone, only a moderate recovery is the best that can be expected in 2013.