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The ECB’s Strategic Review in 2020 may (slightly) change the inflation target

January 21, 2020
The global map shows the inflation targets of developed and emerging markets. In emerging economies central banks tend to have higher inflation targets than the central banks in their developed counterparts. The difference generally arises from their stronger inflation rates partly due to lower productivity in tradeable goods production in emerging markets. This key feature is likely to persist as the catch-up process of many emerging markets will continue for some time. [more]

More documents about "Macroeconomics"

277 (109-120)
January 28, 2016
After three years of high GDP forecast accuracy, we were off the mark by a substantial margin in 2015. The miss can mainly be traced to our assumptions with regard to oil, the USD, the magnitude of the refugee influx and a bit of bad timing, as the USD and oil saw a massive adjustment right after we had published our 2015 forecast. Last year’s imponderables are once again at the top of our list of forecast uncertainties for 2016. In this issue we also look at the wage round in 2016 and Chancellor Merkel’s asylum policy. [more]
January 21, 2016
Our analysis on labour mobility shows that mobility between EMU countries is relatively low compared to the US. EMU mobility was far higher in the post-crisis period and increased significantly since 2007. In particular, the ongoing, pronounced variation of the labour market situation across EMU countries should remain a driving force of bilateral migration. The higher mobility provides some limited hope for the ECB. However, the increased competition caused by the jump of migration from non-EMU countries will probably put the increased EMU labour mobility at risk, which was dominated by the shift of flows in the direction of Germany as EMU’s stability anchor since the start of the crisis. [more]
January 11, 2016
The digital revolution is having a beneficial economic effect: new technologies are appearing at a faster rate. Of course, many of these technologies are still in their infancy and in some cases are still in the visionary stage, but they nevertheless hold unforeseen and lucrative potential. The race for digital technologies and appropriate monetisation strategies has been on for some time, especially among the large internet platforms. In the future, however, digital technologies will also find their way into traditional companies where they will gradually evolve into a comparative competitive advantage. This poses a number of advantages and disadvantages, which we urgently need to discuss. [more]
January 8, 2016
Asia’s needs for infrastructure are vast. Getting the right financing mix for infrastructure projects would be rewarding for borrowers and lenders and, more importantly, provide a boost to GDP growth for the region in the medium term. Despite some remarkable success stories, providing adequate transport networks, power, water and other facilities remains a monumental task in Asia. This note gives a detailed account on selected country experiences with infrastructure financing in Non-Japan Asia. As different countries are at different stages of development and face diverse macroeconomic backdrops and endowments, suitable financing options for infrastructure development will vary. Governments and multilateral agencies will remain important providers of funding, but the role of private financing looks set to grow. This underscores the need to put more effort into improving transparency and governance as well as enhancing cooperation in harmonising capital market standards and facilitating cross-border flows. [more]
December 22, 2015
The manufacturing sector's stock of foreign direct investment (FDI) added up to some EUR 251.1 bn in Germany in 2013. This is equivalent to more than 27% of total German FDI. The data is collated on the basis of the specific business sector to which a German investor belongs. The statistics incorporate the following direct investments of domestic companies and private individuals: firstly, direct cross-border share capital or company voting rights of 10% or more. Secondly, stakes in foreign companies are taken into account if the directly and indirectly (that is via dependent holding companies) held share capital or voting rights exceed the 50% mark. [more]
December 17, 2015
Even after yesterday’s Fed rate hike – the first in nine years – the central banks will continue to generously provide the global economy with liquidity in 2016. Global growth looks set to remain below the average and uneven in 2016, at 3.3% (2015: 3.1%). With oil prices normalising somewhat – the oil price decline in 2015 probably contributed ¼ - ½ of a pp to global growth – and wage inflation moderate – with the possible exception of the US, where wage growth might finally pick up considerably in view of almost full employment – household consumption will again probably be the most important growth engine. Despite extremely low interest rates, credit-driven exuberance – which, by the way, was one of the reasons for the global economic and financial crisis in the middle of the past decade – seems unlikely in 2016. [more]
December 16, 2015
The German economy was extremely stable over the course of 2015, although the volatile newsflow that ranged from the oil price shock, material euro exchange rate depreciation, “Dieselgate” right through to the refugee crisis could make one think otherwise. Driven by a 15-year high in private consumption growth economic output rose by more than 1 ½% in 2015, as already achieved in 2014. Economic growth is set to accelerate to nearly 2% in 2016, following a pretty stable trend over the course of the year. Private consumption should remain the most important growth driver. Public consumption will remain expansionary given the continued influx of refugees and resulting public spending. If refugees can be successfully integrated into the labour market, the refugee crisis will provide Germany's ageing society with a medium-term opportunity. [more]
December 9, 2015
As digital processes reshape commerce and social life, payment service providers are striving to offer users instruments to transfer funds in a way that matches this immediacy and ubiquity. With the payments market in such a flux, the ECB is pushing banks to provide at least one pan-European instant payment solution in order to prevent a re-fragmentation of the Single Euro Payments Area. However, instant services can be based on different technical set-ups: closed-loop, open-loop and decentralised payment networks. There is an opportunity for new technologies and providers to cater for user needs and win market share. Innovation in instant payments will not alter the economics of payments, though. Positive network externalities and economies of scale in electronic processing will probably lead to a consolidation around a few instant payment systems in the long run. [more]
November 26, 2015
Roughly 150 countries have submitted their national climate protection commitments in the run-up to the United Nations Climate Change Conference in Paris. While these commitments will probably not suffice to meet the 2°C target, related assessments are very favourable nonetheless. Obviously, the bottom-up approach, that is to say the voluntary national climate protection commitments, promises greater progress than the globally coordinated negotiated solution targeted at past UN climate conferences. There is an awareness that the current proposals have shortcomings as regards the 2°C target, but there are hopes that the individual countries will aim for more ambitious targets over the next few years. Sentiment is thus swinging between optimism and realism. Considering the growing demand for energy, the international community is clearly only just beginning to encounter the real challenges of climate protection. [more]
November 26, 2015
The logistics sector in Germany is characterised by innovative and diversified companies as well as very good location factors. There are, however, economic and structural factors which suggest that turnover growth will be relatively moderate over the next few years. Between 2003 and 2008 sector turnover grew by a nominal 4.6% per year. Following the recession, that is from 2009 to 2014, the growth rate dropped to 3.4% p.a. (while the inflation rate was somewhat lower). Over the next five years average annualised nominal turnover growth is likely to be more in the range of between 2% and 3%. This would propel sector turnover through the EUR 300 bn barrier. The logistics sector will remain a focus of state regulation; this is true particularly of the important transport segment. [more]
November 19, 2015
In the German manufacturing sector real net fixed assets in 2013 were 0.8% lower than in 2000. Looking at the average, however, masks the fact that only four out of 19 manufacturing sectors expanded their capital stock compared with 2000. The major importance of the automotive industry is striking. Its net fixed capital formation exceeded that of all other manufacturing sectors combined between 1995 and 2006 and has done so since 2009. The auto industry boosted its real net fixed asset in Germany between 2000 and 2013 by nearly 38%. In the energy-intensive sectors, by contrast, the capital stock in Germany continues to shrink, a trend that has been ongoing for years. If economic policy conditions in Germany were to deteriorate in future, we would expect manufacturing companies to invest even more heavily abroad. [more]
November 13, 2015
The influx of refugees has raised net immigration to Germany to the record level of more than one million. Among the OECD countries, this trend could put Germany ahead of the United States, traditionally the No. 1 destination country for migrants. As a result, Germany faces the difficult − and costly – Herculean task of integrating the refugees and absorbing the supply shock to the labour market. At the same time, the refugees represent an opportunity for rejuvenating an ageing population in Germany, where there is a growing scarcity of labour and the threat of lower structural growth. In our outlined win-win scenario, successful integration offers Germany the opportunity to consolidate its position as Europe’s economic powerhouse and to increase its attractiveness as an immigration country. A sustained high level of net immigration will attenuate the decline of the trend growth rate brought on by an ageing population. Instead of moving closer to stagnation, the trend growth could still amount to 1% in ten to 15 years as well, which would also benefit social systems. [more]