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Financial assets: Weakest growth in seven years

The financial assets of German households – despite significant losses in the last quarter – will remain above the 6 trillion mark in 2018, but only just: by the end of the year they should be around EUR 6,010 bn.

Eurozone Bond Proposals Overview

Since the start of the Euro-crisis in the aftermath of the Great Recession, policy makers and economists alike have put a variety of proposals for eurozone reform on the table. Facing refinancing problems, the doom loop between banks and sovereigns as well as a lack of fiscal discipline, particular attention has been paid to new types of government bonds. 

Global Economic Outlook update (Q4 2018)

Global growth to remain on a healthy trajectory despite the multiplication of risks:

Self-correcting mechanisms: US fiscal and monetary fuses to preserve  the economic circuit from systemic unsustainability

Fine-tuning policy tools: Fueling demand in the short-term and repairing supply in the medium-term will be the leitmotiv of China and Europe

Technical inspection: The market will continue to differentiate defective emerging economies from sound ones

Germany: Economic cycle risk politics

The sentiment in the German economy continued to deteriorate in December. The ifo business climate index fell to its lowest level for more than two years. 

ECB Preview: Starting Shot for the Great Unwind

Whereas 2018 will be known as the year when the ECB reached the end of its monetary easing path – with the cessation of QE net purchases under which the ECB accumulated a bond portfolio worth €2.6 trillion over the course of close to four years – 2019 will mark the beginning of monetary tightening.

Construction Report: Soft landing with a loose seatbelt

After ten years of growth (2008-2018), we have reached the peak in the global construction cycle. This year will be the turning point for the global construction industry, beginning to cool down gradually to +3% y/y in 2019, from +3.5% y/y in 2018. Over the past decade, most of the growth came from emerging markets (+57% since 2008), while the developed markets have not even fully regained their pre-crisis volumes. 

Economic Insight: Germany - Growth with obstacles

The world economy continued to grow strongly in 2018. Global economic output is likely to have increased by 3.1%, after a plus of 3.2% last year. While economic momentum in the USA even accelerated due to a strongly procyclical fiscal policy, growth slowed in most other economic regions.

COP24: Stranded assets

As the parties to COP 24 gather in Katowice to agree on implementing the Paris agreement, there could be a step up towards the reality of assets having to leave the market and others coming to displace them. 

The View

Worldwide private household liabilities reached a historic high of EUR 39.8 trillion in 2017. At 6.0%, the growth rate was not only slightly above the previous year's level of 5.5%, but also well above the long-term average annual growth rate of 3.9%. Debt growth has accelerated noticeably since 2013 and is gradually returning to levels seen before the financial crisis.

 

Trade Report: The show must go on

The report explains why in 2019, trade momentum is set to soften in line with softening of global growth, while protectionism will stay under control. The report gives three ways the trade war could be avoided, and rank the top five destinations for exporters. Going forward, businesses should prepare for higher cost of trade, trade diversion, and rising political risk beyond protectionism.