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May 19, 2020

A German-French trial balloon on fiscal union

On 18 May German Chancellor Angela Merkel and French President Emmanuel Macron proposed the set-up of a one-off EUR500bn strong (3.6% of 2019 EU GDP) recovery fund to help those economies hit hardest by the Covid-19 pandemic.

May 18, 2020

Retail in the U.S.: Department store bankruptcies are only the tip of the iceberg

The Covid-19 outbreak is sending the U.S. economy into an unprecedented recession: Our central scenario anticipates a -2.7% contraction of economic activity for the year 2020, taking into account a two-month lockdown period and a U-shaped recovery starting in Q3. The impact of the crisis on the U.S. retail industry is also unprecedented and will have lasting consequences on all segments. However, we find a clear divide between food retail, which is resilient, and discretionary retail, which is cyclical, at least for the eighteen months to come.

May 15, 2020

Automotive in Europe: -30% in 2020, in spite of active googling for new cars

In Europe, both new car registrations and the business climate slumped in April. High frequency indicators based on Google trends now point to a renewed interest in cars but with the exception of Germany, that won’t be enough to drive a strong revival in car purchases before Q3.

May 15, 2020

Germany: Q1 GDP drop only the tip of the iceberg

The Covid-19 crisis has pulled the rug out from under the feet of the German economy. According to the Federal Statistical Office's flash estimate, the GDP setback in Q1 2020 amounts to a hefty -2.2% Q/Q - the sharpest rate of decline since the height of the great financial crisis (Q1 2009).

May 14, 2020

Lower for longer: Covid-19 to weigh on interest rates

In the wake of Covid-19, developed markets’ long-term yields have fallen significantly. However, market participants seem uncertain how to integrate the ensuing massive fiscal and monetary easing in their medium-term rates expectations.

May 13, 2020

UK: Brexit uncertainty could jeopardize the recovery in H2

UK Q1 GDP fell by -2% q/q, in line with expectations. This release confirms that each week of lockdown cuts output by around -6%. Even before implementing a Covid-19 lockdown on 23 March, the UK economy was already on a weak footing, posting no growth in Q4 2019. And at the start of the year, advanced indicators pointed to below normal investment activities and trade as Brexit uncertainty was still looming.

May 08, 2020

Pensions: Corona reveals need for further pension reforms in Germany

The Corona pandemic renders the German government’s optimistic economic assumptions on which the forecast of the pension contribution rates and the benefit level until 2025 are based, obsolete. Due to short-time work and rising unemployment looms a shortfall of at least EUR 8bn. With pension cuts prohibited by law, an increase of the contribution rate can only be avoided by depleting the sustainability reserve faster than planned.

May 06, 2020 | Specials

Global trade: COVID-19 losses equivalent to a return of 1994 tariffs

Global trade could remain below 90% of its pre-crisis level even after lockdowns are lifted and only recover gradually in H2 2020. We estimate that lockdowns and the uncoordinated deconfinement could cost merchandise trade USD2.4tn, the same as if all countries hiked their tariffs to 17%,  i.e. close to levels last seen in 1994.

May 05, 2020 | Specials

Emerging Markets: Capital outflows bottomed out but beware of the weak spots

Capital outflows from Emerging Markets (EMs) bottomed out in March but could increase again should renewed trade tensions continue. Total portfolio outflows from EMs moderated to an estimated -USD18bn in April from the record outflow of -USD88bn in March.

Apr 30, 2020 | Specials

ECB: Show and tell

Today’s policy announcements were geared in particular towards easing liquidity conditions but left the job unfinished with regard to boosting the ECB’s ability to backstop Eurozone debt markets.

604 releases in total