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Outlook 2017: Optimism despite multiple risks

Elections in France, Germany and the Netherlands, the move of the US President-elect Donald Trump into the Oval Office, the start of Brexit negotiations – given the elevated uncertainty hanging over political and economic developments next year, there is really only one thing that is certain: 2017 will be an eventful and interesting year.

Ifo test shows bullish business conditions

Business conditions improved again in December for the fourth month running and are now the rosiest for more than four years.

The economic value of security

Security is a fundamental human need, second in importance only to physiological needs such as the consumption of food.

ECB: No tapering in sight

The ECB is sticking with its loose monetary policy: Although the monthly bond purchases are to be reduced to EUR 60bn from April, they are set to continue until at least the end of 2017.

Italy: Reform standstill sine die

After the defeat in the constitutional referendum Italy’s Prime Minister has tendered his resignation. In the short term heightened political uncertainty is likely to weigh on financial markets and economic sentiment.

Italy: Ahead of the vote

The outcome of the Italian constitutional referendum remains open. Polling has already stopped, with a third of voters still undecided.

Inflation and exchange rate: Favorable constellation for tapering

Today’s inflation numbers are moving slowly in the right direction. Although next week the ECB is likely to extend its monthly bond purchases of EUR 80bn for a few months more, we see plenty of reasons for it to simultaneously announce a reduction in the purchase volume for the time thereafter.

PMIs show economic momentum accelerating

Today’s survey results confirm that the eurozone economy moved up a gear in the final quarter of 2016.

An interest rate model for the eurozone and the US

Our extended interest rate model offers possible explanations for key interest rates, money market rates and long-term interest rates in the eurozone and the US that offer a high level of adaptability to the actual developments.

German economic forecast 2017

We expect the German economy to grow by 1.5% in 2017 after 1.9% in 2016. Consumption remains the driving force. We expect the global economic activity to pick up somewhat. The US economic outlook is surrounded by elevated uncertainty.