German Economy to Gain Additional Momentum in 2016
January 25, 2016 | IHSEstimated reading time: 3 minutes
Private consumption, which has been fairly weak in Germany for most of the past 20 years, now benefits from fairly high real income growth by historical standards. Nominal wage growth of around 3 percent is accompanied by inflation at around 0.5 percent, with additional oil price declines since November 2015 ensuring that purchasing power will continue to gain at a healthy clip in 2016. Labor market conditions are the best in at least 25 years, employment levels have reached all-time highs and unemployment is still trending lower at present. Consumer confidence will thus remain high in the foreseeable future.
At the same time, investment in equipment that has been held back in recent years due to elevated uncertainty linked to the Eurozone debt crisis is expected to come more to the fore in 2016, and construction will pick up for the long-neglected (transport and IT) infrastructure and for housing – the latter not least due to the recently accelerating refugee influx.
Finally, public expenditures will increase much more strongly than during 2010-14, owing to the aforementioned requirements to boost infrastructure and to meet refugees’ subsistence, and subsequently job qualification, needs. The government has already indicated they are willing to use recent budget surpluses for these purposes and will not tighten fiscal policy elsewhere to compensate.
Political uncertainties related to managing the refugee crisis harbors the largest risk
The largest risk to this fairly positive outlook is linked to the refugee factor. This pertains not so much to the direct impact on the labor market – unemployment is likely to turn higher from about mid-2016 onwards as refugees with resident status enter the jobs market. However, employment should continue their ascent in any case – but to potentially unsettling political conflicts about measures to limit immigration.
On balance, IHS Global Insight remains confident that the government will find solutions that will prevent any severe disruptions to economic activity, such as violent clashes on the streets or goods transport being lastingly inhibited by strict border controls.
Page 2 of 3
Suggested Items
SPEA Expands in Southeast Asia with New Subsidiary in Thailand
05/17/2024 | SPEASPEA, a global leader in automatic test equipment for the manufacturing of semiconductor, microelectronic and electronic devices, today announced the opening of its new subsidiary in Thailand. This expansion marks a significant step forward in SPEA's commitment to serving the growing Southeast Asian microchip and electronics market with leading-edge manufacturing machinery and equipment.
PCB Market Size to Grow by $29.06B from 2024-2028
05/17/2024 | PRNewswireThe global printed circuit board (PCB) market size is estimated to grow by USD 29.06 bn from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of over 6.6% during the forecast period.
AT&S 2024/25 on Growth Course Again
05/17/2024 | AT&SAT&S operated in a challenging market environment in the financial year 2023/24. After a strong second quarter, demand was relatively weak again in some market segments in the second half of the financial year.
Shipments of OLED Monitors Hit 200,000 Units in 1Q24, Annual Forecast to Reach 1.34 Million
05/17/2024 | TrendForceTrendForce’s latest report reveals a robust start to 2024 for OLED monitors, with shipments reaching approximately 200,000 units in the first quarter—marking a YoY growth of 121%.
Magnachip Celebrates the Grand Opening of Magnachip Technology Company in China
05/16/2024 | MagnachipMagnachip Semiconductor Corporation celebrated the opening ceremony of Magnachip Technology Company, Ltd. (MTC) yesterday at its headquarters located in Hefei, China. MTC is a subsidiary of Magnachip, established on December 20, 2023, to expand the Company’s display driver IC and power IC businesses in China.