The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program.
Bundesbank revises German GDP forecasts significantly downwards
The Deutsche Bundesbank has significantly revised downwards its forecasts for economic growth in Germany. As it announced as part of its macroeconomic forecast, it now expects economic output to shrink in the current year and significantly lower growth rates in 2025 and 2026 than before. The reasons are more pessimistic assumptions about demand for German industrial goods and private consumption. A calendar-adjusted decline in real gross domestic product (GDP) of 0.2 percent is expected for 2024, after GDP growth of 0.3 percent was forecast in June.
Eurozone industrial production stagnated in October
Contrary to expectations, industrial production in the euro area did not fall at the beginning of the fourth quarter. As Eurostat reported, production in October stagnated at the previous month’s level. Economists surveyed by Dow Jones Newswires had forecast a decline of 0.2 percent. Over the year, there was a decline of 1.2 percent, compared to 2.1 percent that had been expected.
VCI: Only half of chemical companies expect demand to recover in 2025
The hoped-for recovery in demand in the chemical-pharmaceutical industry in Germany is unlikely to materialize in the coming year either. In a survey by the industry association VCI, half of the member companies surveyed do not expect this to happen until 2026 at the earliest, as it now announced in Frankfurt. The other “more confident” half, on the other hand, expects an upward trend from summer or autumn.
VCI: Many industrial customers consider inventory levels to be too high
According to the industry association, customers in the chemical industry in Germany do not order long-term. “If they buy, then in the short term,” said the President of the industry association VCI, Markus Steilemann, at the annual press conference in Frankfurt. Most people are not currently thinking about replenishing their warehouses. “On the contrary: many industrial companies currently assess their inventories as too high,” says Steilemann.
Federal government: No sustainable economic trend reversal is foreseeable
Given the renewed deterioration in recent sentiment indicators and persistently high levels of geopolitical and domestic political uncertainty, the federal government does not yet see a sustainable economic recovery. According to revised data from the Federal Statistical Office, the German economy almost stagnated in the third quarter, the Federal Ministry of Economics said.
Ifo Institute: Companies are significantly reducing their investment plans
Companies have significantly reduced their investment plans. This emerges from a survey by the Ifo Institute. Accordingly, companies’ investment expectations for the current year fell to minus 9.0 points in November, after minus 0.1 points in March. Cuts are also planned for 2025. However, the decline is likely to be smaller than this year.
Macron appoints centrist Bayroun as new prime minister
French President Emmanuel Macron has appointed Francois Bayrou as prime minister, choosing an experienced centrist politician to serve as an arbiter between the country’s feuding political factions. The 73-year-old is head of the Mouvement Democrate party, or MoDem for short. Bayrou’s predecessor, Michel Barnier, had previously failed to find enough support in the highly fragmented French National Assembly to pass a budget for 2025.
Habeck wants tax cuts for investments
Federal Economics Minister Robert Habeck (Greens) has spoken out in favor of a tax cut for companies through an investment bonus in order to stimulate investment in Germany again. However, he rejected a general reduction in corporate tax rates. Rather, he wants to provide incentives with a tax credit for investments of 10 percent in addition to the normal depreciation options. At a conference in Berlin, Habeck also called for an auction for the construction of two new gas power plants to be made possible next year, despite criticism of the power plant law from his house, in order to ensure a stable energy supply.
SPD plans far-reaching reform of the debt brake – Magazine
According to a magazine report, the SPD is relying on massive government investments and a reform of the debt brake in the election campaign. “Germany needs an investment update,” says a nine-page final report from the party, according to the news magazine Der Spiegel.
Trump: Europe should monitor Ukraine ceasefire
After US President-elect Donald Trump’s recent meeting with Ukrainian President Volodymyr Zelensky and French President Emmanuel Macron, the first outlines of a new US policy regarding the Ukraine war are emerging. Europe would have to shoulder the bulk of the burden of supporting Kiev with troops to monitor a ceasefire and weapons to deter Russia, according to people familiar with the meeting. At a meeting in Paris on December 7th, Trump said that he did not support Ukraine’s membership in NATO, but that he wanted a strong, well-armed Ukraine to emerge from an end to the fighting.
Federal Government: Ukraine and USA at the center of the EU summit
According to the federal government, the heads of state and government of the European Union (EU) will primarily talk about foreign policy issues at their regular summit meeting starting on Thursday in Brussels. “The focus of the meeting will once again be the situation in Ukraine,” said government spokesman Steffen Hebestreit.
Habeck: Electricity price record outlier – new power plants needed
Federal Economics Minister Robert Habeck (Greens) admitted that 936 euros per megawatt hour on Thursday – a record value – were “of course extremely high prices”. At the same time, he emphasized that this was a weather-related outlier and that high or fluctuating prices could not be avoided in phases without wind and electricity. However, adding electricity capacity would help.
Trump team wants to at least reduce banking supervision – circles
US President-elect Donald Trump’s transition team has begun exploring options for dramatically reducing, merging or even eliminating Washington’s top banking regulators, according to insiders. For example, in recent conversations with potential candidates to head banking regulators, Trump advisers and officials in his new Department of Government Efficiency have asked whether the president-elect would oversee the Federal Deposit Insurance Corp. (FDIC) could be abolished.
Trump’s team is considering air strikes against Iran
US President-elect Donald Trump is looking for ways to prevent Iran from building a nuclear weapon. As people close to him report, this also includes preventive air strikes. That would be a break with Tehran’s long-standing policy of containing Tehran through diplomacy and sanctions. The option of a military strike against nuclear facilities is now being considered more seriously by some members of his transition team, it is said.
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(END) Dow Jones Newswires
December 13, 2024 07:42 ET (12:42 GMT)