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New Market Report Now Available: Germany Business Forecast Report Q2 2013


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2013-03-29 04:04:32 - New Country Reports market report from Business Monitor International: "Germany Business Forecast Report Q2 2013"

Core Views

While weak economic data out of Germany has been in line with our below-consensus real GDP growth estimate for 2012, the collapse in business and consumer confidence has prompted us to revise down our 2013 GDP projections. We expect growth to recover in the second half of the year, although this will be mainly driven by external rather than domestic demand.

We still believe a grand coalition between Germany's centre-right Christian Democrats (CDU-CSU) and the centre-left Social Democratic Party (SPD) remains the most likely outcome following the September 2013 general election. Under such a government we would expect slightly less focus on fiscal austerity both at home and for periphery eurozone states, which would be net positive for domestic demand

and the future of the single currency.


Full Report Details at
- www.fastmr.com/prod/536354_germany_business_forecast_report_q2_2 ..


Improved terms of trade with Asia have prompted us to revise up our medium-term forecast for Germany's current account surplus. While we expect moderately narrower surpluses over the next few years, we see little chance of Germany running a current account deficit for at least the next five years.

Major Forecast Changes

We have revised down our 2013 real GDP growth forecast to Germany from 1.3% to 0.8%, on the back of the recent drop in business and consumer confidence readings.

We have revised up our current account surplus forecast for 2013, from 6.1% of GDP to 6.3%.

Key Risks To Outlook

We see downside risks to our 2013 real GDP growth forecasts coming from domestic and external factors. On the domestic front, uncertainty surrounding policy beyond the 2013 general election could see domestic demand stagnate this year, while the outlook for German exports is clouded by question marks over Asian demand and the sustainability of China's economic stimulus. The trajectory of the euro poses another risk to our positive net exports view. At present we believe that persistent problems with periphery states will keep the currency on the back foot over the next few years, but there is the possibility that as tail risks to the currency union dissipate, the euro stages a relief rally, hurting Germany's terms of trade in the process.

The main risk to our fiscal forecasts is that the German economy, particularly private consumption, performs better than we currently anticipate. This would reduce the need for higher levels of fiscal expenditure (either at home or in periphery eurozone states), while boosting fiscal revenue. Weakening labour market indicators suggest to us that this is unlikely to happen over the next 18 months, but beyond 2013 there is a chance that the German consumer starts spending.

Partial Table of Contents:

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Political Outlook
Grand Coalition Still On The Cards
- A grand coalition between Germany's centre-right Christian Democrats (CDU-CSU) and the centre-left Social Democratic Party (SPD) remains the most likely outcome following the September 2013 general election. Under such a government we would expect slightly less focus on fiscal austerity both at home and for periphery eurozone states, which would be net positive for domestic demand and the future of the single currency.
Long-Term Political Outlook
Tackling The Demographic and Economic Challenges
- The political challenges facing Germany over the coming decade are not so much centred around public policy as trying to foster economic growth in east Germany, managing population decline and dealing with the potential implications of further EU integration. Overall, the political risk profile in Germany remains among the best in the world.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Sub 1.0% Growth In 2013
- While weak economic data out of Germany supports our below-consensus real GDP growth forecast for 2012, the collapse in business and consumer confidence has prompted us to revise down our 2013 GDP projection, to 0.8% from 1.3%. We expect growth to recover in the second half of the year, although this will be mainly driven by external rather than domestic demand. 14
TABLE: ECONOMIC ACTIVITY
Fiscal Policy
More Opposition To Fiscal Consolidation Beyond Election
- Germany will not succeed in reducing its public sector debt burden to the EU-mandated 60% of GDP target level anytime soon, as political opposition to fiscal consolidation increases following the 2013 general election. The main opposition will be towards expenditure cuts, whereas tax hikes are likely to face less resistance.
TABLE: FISCAL POLICY
Balance of payments
Revising Up Current Account Surplus Forecasts
- Improved terms of trade with Asia have prompted us to revise up our forecast for Germany's current account surplus in 2013, from 6.1% of GDP to 6.3%. While we expect moderately narrower surpluses over the next few years, we see little chance of Germany running a current account deficit for at least the next five years.
Eurozone Banking Sector
Banking Sector: Financial Union Remains Elusive
- The eurozone banking sector has struggled in recent months on the back of the regional economic slowdown. However, with a pick-up in growth expected in 2013, and given the reduction in near-term systemic crisis risks, we expect a stronger showing in 2013.
Euro Currency Forecast
Euro Downtrend: Temporary Disconnect
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Full Table of Contents is available at:
-- www.fastmr.com/catalog/product.aspx?productid=536354&dt=t

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.


Author:
Bill Thompson
e-mail
Web: www.fastmr.com
Phone: 18008448156

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