In Germany, hopes are that private consumption will pick up, driven by rising real wages. While the situation for consumers is slowly improving due to significantly reduced inflation dynamics and rising incomes, the recovery will probably be somewhat weaker this year due to high uncertainty and a struggling industry. Most recently, the joint diagnosis joined a series of downward revisions for GDP growth, according to which the German economy is only expected to grow marginally in 2024. Meanwhile, the increased wage costs are particularly noticeable in the service sector, which means that increased price pressure will remain here for the foreseeable future.
Central banks are playing for time
The Fed in particular has recently put the brakes on verbally regarding upcoming interest rate cuts. Although the first steps are likely to follow from the summer, there is “no rush” when it comes to inflation. The ECB also wants to ensure that inflation reliably returns to its target; the size of the expected interest rate cuts has subsequently declined. At the same time, yields on government bonds have risen noticeably again since the beginning of the year. Recently, however, they have developed more sideways. The stock markets have so far been unimpressed by this, and new all-time highs were reached in March. The robust economy in the USA is currently making investors optimistic about the future.
You can download the full edition of Economics & Finance Perspectives at the bottom of this page. If you have any questions, please contact the authors Dr. Max Hanisch and Thilo Bertelsmann.
2024-04-09 01:12:15
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