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German industry: Growth in investment spending driven by only a few factors

January 30, 2019
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Analyst:
During the current cyclical upswing, which started in 2010, German manufacturing companies have increased their real gross capital expenditure by just above 3% p.a. In 2017, the industry accounted for 51% of total other capital spending (intellectual property) in Germany. This shows that manufacturing is the most important driver of research and development and thus of technical progress. The automotive and the pharmaceutical industries stand out from other sectors. The capital stock in energy-intensive industries has been shrinking for years now – a trend that gives cause for concern. While the German manufacturing industry is faced with long-term challenges, we believe that it is nevertheless sufficiently adaptable to remain competitive on a global scale. [more]

More documents about "Germany"

228 (169-180)
November 13, 2014
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Analyst:
169
German engineering firms must prepare to confront several trends over the medium term. The first of these is that a new, bipolar world of engineering markets is emerging. The United States and (once again) China are set to become especially promising centres of growth going forward. Further future trends are, secondly, the gradual shift in product focus towards customised system solutions; thirdly, the growing importance of not purely price-related competitive factors; and fourthly, the reconfiguration of the global division of labour in the engineering sector as the classic distinction between producer countries focusing on standard machinery and others focusing on speciality equipment becomes increasingly untenable. Provided that traditional suppliers to the manufacturing sector manage to spot the new mega-trends in good time, they will be able to build on these to develop promising strategies that enable them to adapt, survive and – ultimately – grow. [more]
November 11, 2014
Region:
170
In sections of the financial industry there are many web- and data-based financial products and services that customers cannot obtain from either their bank or a similar provider. Non-bank, primarily technology-driven providers are increasingly entering the markets for less knowledge-intensive and easily standardisable financial services. Despite valuable comparative advantages that traditional banks have to offer they need to undergo a radical course of innovation therapy during the digital transformation process. To this end modern data analysis methods should be used just as routinely as a seamlessly integrated web of all distribution channels. Modern technologies and appropriate finance-specific internet services need to be implemented efficiently and above all in a timely manner. Strengthening one's own brand and identity as well as the obligation to handle client data confidentially will also help to deliver a sustained increase in customer satisfaction and loyalty. [more]
November 5, 2014
Region:
171
We have cut our German GDP growth forecast from 1.5% to 1.3% for 2014 and further from 1.5% to 0.8% for 2015. We do not see Germany falling into a technical recession in Q3. But the 6 month slump of the ifo index has increased the risk that we might see a negative GDP print in Q4 2014 or Q1 2015. The positive effect of weaker oil prices will be offset by wage growth slowing from 3% plus this year towards 2% in 2015, as export-orientated sectors will respond to weaker external demand. Further topics in this issue: German industry: Temporary slowdown; German construction: Robust investment, but price momentum slowing; Inheritance tax: Constitutional Court ruling likely to weigh harder on business heirs; 25 years after the fall of the Berlin Wall: "Blooming landscapes" only in part. [more]
October 30, 2014
Region:
172
Following weak performance in winter half-year 2014/15 industrial production in Germany is likely to return to a moderate uptrend in the course of 2015, resulting in expansion of roughly 1.5% in real terms in 2014 and about ¾% in 2015. This means the generally muted dynamics of industrial performance in evidence since 2011 would continue in 2015. Industry's share in total German gross value added (2013: 21.8%) will probably decline again, as in 2012 and 2013. The only moderate growth of industry is primarily attributable to the currently subdued level of business activity and external shocks. Nonetheless, structural factors are going to regain importance. The ball is now in the politicians' court. Many of their recently adopted measures give rise to fears that Germany's international competitiveness as an industrial location is likely to decline. [more]
October 29, 2014
Region:
173
Why are German wages/inflation not responding? Much of the answer lies in cultural factors and personal traits which manifest themselves in a high aversion to inflation. This in turn has led to Germany’s unique economic fundamentals and institutions. At the core it seems that Germans and German society can handle distribution conflicts involving time inconsistency problems better, on average, than many other nations. Given the German peculiarities the ECB has more time to run its supportive policy without creating new imbalances in the largest EMU economy. Therefore the ECB has scope to extend its balance sheet via private and most likely public QE. [more]
September 30, 2014
Region:
174
The recent positive surprises provided by real economic indicators have for now banished concerns that Germany might slide into recession in Q3. However, the ongoing geopolitical risks and the question marks hanging over the expected cyclical upturn will probably lead to weaker growth in exports and company investment. That is why we have scaled back our growth forecast for the winter half-year 2014/2015. Thus, we have lowered our forecast from 1.8% to 1.5%. In our current issue we also address Germany’s fiscal position, we analyse the consequences of potential Russian gas supply disruptions and we take a look at the investment behaviour of German households. [more]
September 2, 2014
Region:
175
German GDP only 1 ½% in 2014, considerable risks for 2015. We have scaled back our GDP forecast for 2014 from 1.8% to 1 ½%, as we now expect weaker growth in H2. This also reduces our forecast for 2015 from 2.0% to 1.8%. The risks that this still constitutes an overly optimistic forecast have increased significantly. The German investment cycle will likely be more subdued than expected due to the ongoing weakness of world trade and increasing geopolitical strains. Even the hitherto still robust private consumption is emitting its first warning signs. [more]
August 27, 2014
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Analyst:
176
Besides transport and energy infrastructure, communications infrastructure is steadily gaining in importance in the regional competition to attract investment. One source of concern in particular though is the significant gulf in investment both between west German and east German federal states as well as between urban and rural regions. This is compounded by the problem that there is usually no viable business model for projects in rural areas without government subsidies. As there is no such thing as a standard blueprint for the broadband rollout with its huge investment requirements, every single project with its specific local features needs to undergo a critical economic feasibility analysis. On this basis, efforts should be taken to work out the best rollout model in terms of technology, funding and time horizon, respectively. In essence, the broadband rollout in Germany requires more government stimuli to foster private investment, but these efforts need to be coordinated and based on sound judgement. [more]
August 4, 2014
Region:
177
Economic growth probably suffered a worse setback in Q2 than initially presumed. We only expect stagnation now, but would no longer rule out a minimal decline. All in all, global economic conditions do not point to dynamic growth in H2. In particular, the tougher sanctions on Russia and the risk of further escalation of the conflict are set to weigh on business sentiment and investment activity in spite of Russia's low share in German exports. The debate triggered by ECB and Bundesbank comments about higher wage increases in Germany is likely to have a similar impact, even though the substance of the statements is less spectacular, on closer inspection, than the media hype. As uncertainties abound we have decided to refrain for now from making a downward revision to our full-year forecast of 1.8% GDP growth. [more]
June 30, 2014
Region:
178
After a good start into 2014, manufacturing output in Germany looks set to grow by 4% in real terms in the full year. Even though business expectations have recently weakened somewhat, they remain in positive territory. Despite the good labour market situation in Germany inflation has decelerated noticeably. The outlook of a recovering global economy, a sliding euro and the introduction of a nation-wide minimum wage in Germany lead us to forecast that inflation is bottoming out. After hitting 1.1% in the current year it could pick up to 1.6% in 2015. [more]
June 26, 2014
Region:
179
Due to numerous political incentives, especially relating to the Renewable Energy Sources Act (EEG), the renewables share has increased sixfold since 1997 with regard to both primary energy consumption and electricity generation. Germany's first energy policy rethink (or Energiewende 1.0) not only sent costs ballooning but also impacted on electricity prices, the generation mix and emissions trading. And despite the EEG the contribution of wind/solar to primary energy consumption (PEC) was a mere 2%-plus in 2013. Overall, the “green electricity share” could reach roughly 60% by 2035. But how will the remaining 40% be generated – in view of the Energiewende 2.0? Depending on the scenario, the onus is more on natural gas or coal. [more]
June 4, 2014
Region:
180
With the dream start into 2014 we have lifted our GDP forecast to 1.8% (from 1.5%). For 2015 we maintain our 2% call, as we expect that the only temporary increase in the sum of gross wages resulting from the introduction of the minimum wage will be offset by more cautious investment spending. [more]
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