Press Releases

Current and older Press Releases of DIW Berlin
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12 April 2017

Joint Economic Forecast Spring 2017: Upturn in Germany strengthens in spite of global economic risks

Press release of the project group "Gemeinschaftsdiagnose": German Institute for Economic Research (DIW Berlin), Halle Institute for Economic Research (IWH), ifo Institute, Kiel Institute for the World Economy (IfW), RWI - Leibniz Institute for Economic Research

5 April 2017

Chinese investment strategy in Europe differs according to region

Technology transfer primary motive behind Chinese OFDI in Western Europe; access to EU internal market motivates OFDI in Central and Eastern Europe; factors influencing investment decisions differ based on type of investment

China’s investment strategy in the EU differs depending on the target country. With investment in Western Europe, the main motivation is gaining access to advanced technologies. There, a majority of Chinese capital is invested in M&A – specifically in the acquisition of hidden champions, world leaders in their respective market segments. Investment in Central and Eastern Europe, on the other hand, is more oriented toward new ventures; such investment is more about facilitating Chinese access to the EU's internal market.

These are the findings of a new study conducted by the German Institute for Economic Research (DIW Berlin), which also investigates the precise determinants of the two different types of investment.

Accordingly, the main factors that determine Chinese investment activities are the market size in the target country, and the intensity of bilateral trade between that country and China. When it comes to new ventures, unit labor costs, the size of the industrial sector, and the regulatory density have a negative impact on Chinese investment.

“Sound institutions, which are indicative of heavily regulated, highly competitive markets, tend to deter Chinese investors,” explains study author Christian Dreger, Research Director in the Department of International Economics at DIW Berlin. “Here, Chinese investors may have a different sense of risk from their Western counterparts, who are less reluctant to set up new ventures in highly competitive target regions.” In other respects, however, the determinants of Chinese direct investment differ very little from conventional patterns.

22 March 2017

World Happiness Day: SOEP data show that life satisfaction of Eastern Germans is catching up

People across Germany are happier today than at any other point since German reunification

According to a new analysis of data from the nationally representative, long-term Socio-Economic Panel (SOEP) study, people in both West and East Germany have been happier on average since 2015 than at any other point since German reunification (Figure 1). The substantial increase in life satisfaction from 1990 levels is primarily the result of the catch-up process in East Germany. Yet even 25 years after reunification, the level of life satisfaction in East Germany is still substantially below that in West Germany (Figure 2).

“Although it’s sobering that there is still a difference between East and West, the gap has diminished significantly over the years and is lower now than ever before,” says SOEP Director Jürgen Schupp, who conducted the analysis.

22 February 2017

The austerity policy was counterproductive in Spain, Portugal, and Italy

DIW study showed: To some extent, drastic savings measures neutralized the effects of structural reform. The countries affected relapsed into recession without having improved their financial picture – a balanced policy mixture would have been better.

The austerity measures and tax increases implemented from 2010 onwards did not reduce sovereign debt in Spain, Portugal and Italy as anticipated. Instead, they were among the forces that drove the three economies back into recession. Contrary to popular opinion, the failure of the consolidation strategy is not the result of a lack of the will to reform on the part of the relevant governments. Actually, the dramatic spending cuts and tax increases prevented the reforms that were implemented from unfolding their full effect. That is the result of a new study by DIW Berlin that examined the effects of the austerity policy in Spain, Portugal, and Italy for the period 2010 to 2014.

According to the study, the enormous private household debt in the three countries played a key role in the policy’s negative impact on growth. In Spain, for example, private households had to pay more to service their debt as the result of stricter financing conditions.  As a result, private household debt fell from 87 percent of GDP in 2007 to 60 percent in 2014. “Private households used a large proportion of their disposable income to pay off outstanding debt and had less money available for consumption,” said author Mathias Klein. “Then the government raised taxes and cut spending, which only amplified the effect. The sharp drop in private consumption reduced GDP and the already high unemployment level rose again.”

20 December 2016

Despite political uncertainty, German economy continues to expand – even as employment growth slows down

German economy’s growth rate will drop next year, primarily due to calendar effects – labor market expansion losing some momentum – numerous risks for the global economy

According to a new forecast by the German Institute for Economic Research (DIW Berlin), the German economy’s upward trend will continue through 2017 and 2018 – even though the current global economy is characterized by substantial risks. German GDP growth is expected to amount to 1.2 percent in 2017, a figure that is lower than this year’s 1.8 percent primarily because there will be fewer workdays next year. DIW Berlin’s autumn forecast predicted a growth rate of 1.0 percent for 2017, which has now been adjusted upward. The growth rate should be higher again in 2018, amounting to 1.6 percent.

 

Yet the significant risks to economic development –government elections in several European countries, tough negotiations related to the Brexit, and structural problems in the Italian banking sector, among others – should not be ignored. Germany’s substantial 2016 budget surpluses will decrease significantly in 2017 and completely disappear by 2018, at which point slight deficits may also materialize.

Private consumption, which remains the German economy’s primary growth driver, is expected to decline over the forecast period. The very strong employment growth of the past few years has been losing momentum, and this alone has been dampening income development. Furthermore, higher energy prices will lead to a rise in inflation, which in turn will have a negative effect on purchasing power. The projected inflation rates for 2017 and 2018 are 1.4 and 1.5, respectively. In 2017 unemployment levels will remain low (5.9 percent). Exports are developing favorably, but demand from the EU is likely to suffer in the coming months as a result of the Brexit decision as well as the political uncertainty that is currently plaguing several countries.

21 November 2016

Lack of equal rights regarding financial decisions contributes to women’s lower level of financial literacy

DIW Berlin examined the causes for the gender gap in financial literacy in several countries – Cultural factors play a key role in addition to income, education, and experience – Better financial literacy would mean more financial security for women in retirement

In most countries of the world, women know less about financial matters than men. Socio-demographic factors such as income, age, education, and experience with finances partially explain the gender gap in financial literacy. Cultural aspects, including the role of women in society, are also key factors. These are the findings of a study by the German Institute for Economic Research (DIW Berlin).

The study focused on Germany, the US, and Thailand. Men in Germany and the US outperform women – even women with higher educational levels and female heads of household – on financial literacy tests. In Thailand on the contrary, women know at least as much about financial matters and money as men. “In Thai culture, women often have the financial responsibility in the household. On this point, equality between men and women is greater there than in Germany and the US ,” said Antonia Grohmann, the author of the study.

15 November 2016

Private R&D not necessarily drawn to areas with high public R&D

Germany’s research and development concentrated in urban areas – public research undergoing dynamic development

According to a new study conducted by the German Institute for Economic Research (DIW Berlin), spatial proximity to industrial production plays a greater role for Germany’s private research and development (R&D) than does proximity to publicly funded research institutions and institutes of higher education (IHE).

“Policy should promote transregional networking among research facilities, higher education institutes, and businesses,” recommends DIW economist Alexander Eickelpasch. Areas with lower levels of industrial activity should thus not only promote the transfer of knowledge within the region but also take advantage of public research conducted elsewhere in order to support the local economy. Furthermore, to make better use of knowledge potential at the local level, regional industry should be strengthened – for example, within the framework of industrial development policy.

4 October 2016

People in Germany still more than willing to show solidarity with EU countries in crisis

A study by DIW Berlin shows that almost half the adult population of Germany believes helping EU countries in crisis is the right course of action—around 30 percent oppose it—cuts in welfare spending in the crisis countries are also criticized

Contrary to the image often presented, many people living in Germany support German aid for EU countries in financial crisis. In the second half of 2015, 48 percent of adults considered it to be the right course of action for Germany to help other EU member countries. Around 30 percent opposed this and 20 percent were indifferent. These are the findings of a joint study by the German Institute for Economic Research (DIW Berlin) and Leipzig University, based on data from the Socio-Economic Panel (SOEP). Compared with earlier surveys by Eurobarometer, popular support has not diminished since 2010. Authors Holger Lengfeld, Professor of Sociology at Leipzig University, and Martin Kroh, Deputy Head of SOEP, said that, “Although the financial crisis escalated considerably in some southern European countries during this period and in some years, notably during the Greek crisis, there were a whole host of negative headlines, people are still very willing to show solidarity.”

29 September 2016

Joint economic forecast: German economy on track – economic policy needs to be realigned

Thanks to a stable job market and solid consumption, the German economy is experiencing a moderate upswing. The GDP is expected to increase by 1.9 percent this year, 1.4 percent in 2017, and 1.6 percent in 2018, according to the Gemeinschaftsdiagnose (GD, joint economic forecast) that was prepared by five of Europe’s leading economic research institutes on behalf of the Federal Government. The most recent GD, which was released in April, predicted a GDP growth rate of 1.6 percent for 2016 and 1.5 percent for 2017.

23 September 2016

Likelihood of holding a senior management position: gender gap largest in financial sector

Availability for full-time work still a prerequisite for climbing the career ladder in all sectors

Overall, women in Germany have considerably lower odds of holding a senior management position than men, particularly in the financial sector. These are the findings of a study conducted by the German Institute for Economic Research (DIW Berlin) based on data from the Socio-Economic Panel (SOEP) study for 2001 to 2014. Although the financial sector has a comparatively high number of senior management positions, this is a structure that primarily benefits men. According to DIW Berlin’s Research Director Gender Studies, Elke Holst, one of the biggest career barriers faced by women is their tendency to more frequently work part-time. “Companies still prefer management positions to be full-time,” says Holst. “If we don’t want flexible working time models to end up being career killers in the rush hour of life, a change in mentality is required.”

13 September 2016

German economy temporarily losing momentum

DIW Berlin short-term economic forecast: German GDP will increase by 1.9 percent in 2016, 1.0 percent in 2017, and 1.6 percent in 2018 – Brexit decision temporarily hindering growth – unemployment continues to fall, but wage increases are also slowing down – public budgets will end all three years with surpluses

According to the latest economic forecast from the German Institute for Economic Research (DIW Berlin), a temporary slow-down is expected for the German economy. Although this year’s GDP is expected to increase by 1.9 percent due to a surprisingly strong start into the year the consequences of June’s Brexit decision are likely to be felt during the winter months, thus dampening Germany’s economic growth. This also contributes to a lower growth rate for 2017: estimates put this figure now at 1.0 percent. As well, 2017 will have three fewer working days than 2016 – and this alone will dampen growth by four-tenths of a percentage point.

7 September 2016

Study on past refugees helps develop possible solutions for future integration

Social scientists and economists at DIW Berlin and Humboldt University Berlin researched the integration of refugees who arrived in Germany between 1990 and 2010 – survey data indicate difficult starting conditions with employment and language skills compared to other migrants, but refugees were able to catch up over time

How can we help refugees to successfully integrate into Germany society – especially those migrants who’ve arrived as part of the major influx from the past two years? In order to answer this question, a group of social scientists and economists at the German Institute for Economic Research (DIW Berlin) and Humboldt University Berlin took a look into the recent past. Their key finding: after initial difficulties, refugees who came to Germany between the years 1990 and 2010 were eventually able to catch up to other migrants in terms of employment and language skills.

10 August 2016

The Brexit vote impact: What does the uncertainty mean for the economy?

DIW Berlin study shows that Brexit vote-related uncertainty will do considerable damage to the European and German economies in a way that will be noticeable even two years from now – since the German economy is primarily affected by sinking business investment, policy should be more oriented toward promoting investment

Uncertainty plays a major role in the economy overall – but what are the consequences when financial markets, businesses, and consumers are affected all at once, as in the case of the recent Brexit vote? The German Institute for Economic Research (DIW Berlin) sought to answer this question by isolating the effects of the Brexit vote-related uncertainty shock using a counterfactual analysis. (The authors emphasize that the study should not be considered an economic forecast.) The result: even after several months, the impact of the unexpected Brexit vote outcome will still be noticeable in GDP, unemployment, and the consumer price index. According to the model calculation, euro area GDP will be roughly 0.2 percent lower eight months from now. Due to its openness and dependence on trade, the German economy will be even more strongly affected: in this case, GDP will be 0.4 percent lower. The consensus among the experts: “Even after two years, GDP will still be below the level that would have been in a no-shock scenario.” 

5 August 2016

Brexit decision could cost the German economy 0.3 percentage points of growth in 2017

Brexit putting a strain on trade and dampening investment across the globe – German economy likely to be affected – uncertainty about exports – investment will be restrained, and both income and consumption will lose momentum

Due to the Brexit decision, the German economy is expected to grow by 0.1 percentage points less this year and by 0.3 percentage points less next year than previously forecasted. This is the result of an updated forecast prepared by the experts at the German Institute for Economic Research (DIW Berlin) based on calculations by the National Institute of Economic and Social Research (NIESR) in London.

25 July 2016

The Berlin economy and labor market: can the city transform from startup hotbed to burgeoning metropolis?

DIW Berlin’s experts identified the city’s untapped potential and formed recommendations based on a comprehensive study of its labor market, startup culture, and public investment patterns. The result: good potential, but productivity is low and innovation is weak. Overall, Berlin needs more fast-growing companies.

Has Berlin turned a corner? After a long period of stagnation, the city is on a stable growth path. Economic performance, employment, and population are growing at above-average rates for the first time in years, and unemployment is gradually decreasing. Nevertheless, the unemployment rate is still above the national average, and Berlin is stagnating when it comes to productivity and corresponding income levels.

“Berlin is the only capital in Europe whose productivity and per-capita income falls below the national average,” explains Marcel Fratzscher, President of the German Institute for Economic Research (DIW Berlin). “In recent years, Berlin has awakened from its slumber. There could be many prosperous decades up ahead – but policy needs to be more strongly oriented to making better use of the city’s enormous potential.”

A number of measures are needed for this transformation, emphasizes Martin Gornig, a DIW Berlin specialist in regional economy: “Among other things, we need to improve the growth conditions for young companies, strengthen the potential labor force’s share of workers with intermediate qualifications, and above all, implement the planned infrastructure expansions.”

These and further recommendations for action are derived from multiple new DIW Berlin studies on Berlin’s economy that focus on the labor market, startups, and public investment.

11 July 2016

Brexit decision is likely to reduce growth in the short term

According to the German Institute for Economic Research (DIW Berlin), the uncertainty introduced by the results of the Brexit referendum could noticeably negatively impact on the German economy, resulting in a growth number for next year significantly lower than expected. In particular, the uncertainty about the UK’s economic prospects increased after the referendum, as mirrored in a flight to as safe perceived British government bonds, as well as major fluctuations in the equity markets. As a consequence, British companies are not only likely to hold back with investments, but also to delay or cut-back their plans regarding the creation of jobs—especially since they will presumably start having to take poorer financing conditions into account. This should dampen economic growth in the UK, thus limiting export opportunities for German companies as well.

17 June 2016

German economy experiencing stable growth – but a Brexit could create problems

DIW Berlin forecast: GDP is expected to increase by 1.7 percent this year and 1.4 percent next year – consumer spending still a growth driver, but expanding with less momentum than before – global economy failing to gain traction – Brexit would significantly hinder growth

According to the German Institute for Economic Research’s new summer forecast, the German economy—backed by solid domestic activity—will continue its uptrend, and is expected to grow by 1.7 percent this year.

This figure is one tenth of a percentage point higher than DIW Berlin predicted in the spring forecast, and this change is due to the surprisingly strong first quarter: industrial production grew unexpectedly strongly, employment increased markedly, and wages are noticeably higher, with the result that consumer spending is on the rise. Energy prices are increasing again, however, which is dampening real income. Because significantly fewer refugees are coming to Germany than had been predicted in previous forecasts, the positive economic impulses associated with migration are expected to be smaller, especially in the coming year. GDP growth will slow down somewhat in 2017—to 1.4 percent—primarily due to the fact that there are fewer workdays next year than this year.

9 June 2016

Foreign-owned companies in Germany are investing less in R&D

DIW Berlin study reveals decline in foreign-owned companies’ R&D spending, but increase in overall R&D expenditure due to domestic companies’ considerable investment – foreign-owned companies are investing more strongly in leading-edge  technologies, and midsize foreign-owned companies recently raised their R&D expenditure

Private companies’ overall R&D investment continued to grow between 2011 and 2013. At the same time, companies that are predominantly foreign-owned invested less in R&D than they did in previous years; in contrast, domestic companies spent more on R&D and bulked up their R&D personnel accordingly. These are the results of a new study conducted by the German Institute for Economic Research (DIW Berlin).

For their analysis, experts Heike Belitz and Alexander Eickelpasch of DIW Berlin’s Department of Firms and Markets evaluated data (Wissenschaftsstatistik) from the Stifterverband für die Deutsche Wissenschaft (“Wissenschaftsstatistik”) as well as cost structure surveys from the Federal Statistical Office.

25 May 2016

80 percent of German public in favor of admitting war refugees into Germany

The SOEP’s Barometer of Public Opinion on Refugees in Germany examines the population’s attitudes, expectations, and fears—most respondents supported the rights of refugees to remain in the country in accordance with EU law and the 1951 Refugee Convention—but the majority are in favor of refugees returning if the situation improves in their country of origin

The majority of people in Germany agree with current asylum rules. These are the findings of a survey conducted on behalf of the Socio-Economic Panel (SOEP) study based at the German Institute for Economic Research (DIW Berlin). According to the survey, over 80 percent of respondents think it is right to grant asylum to people fleeing armed conflict in their homeland. Two-thirds of respondents were in favor of admitting refugees under the 1951 Refugee Convention. However, support varies, depending on the reason for fleeing. Those persecuted for human rights activism or membership of an ethnic minority can expect a greater willingness to accept them than persecuted labor unionists.  Equally, the majority of Germans surveyed (55 percent) were in favor of refugees returning home once the situation in their country of origin had improved and the reason for fleeing no longer pertained.

20 May 2016

Private versus public utilities: no overarching trend toward remunicipalization, no differences in efficiency

DIW Berlin conducted two studies on developments in energy supply – private utilities no more efficient than public utilities – consolidation in drinking water sector offers little benefit

More and more cities and municipalities in Germany are once again taking the electricity, gas, and heating utilities into their own hands: between 2003 and 2012, the number of public utilities increased by 17 percent. Yet the number of private utilities increased by 49 percent over the same period—nearly three times as much. These are the findings of a new study conducted by the German Institute for Economic Research (DIW Berlin).

"There is a no evidence that remunicipalization is displacing private energy companies," explains Astrid Cullmann, Research Associate in the Department of Firms and Markets at DIW Berlin. Together with colleagues Maria Nieswand, Stefan Seifert, and Caroline Stiel, Cullmann evaluated newly available data on energy statistics; financial statements from public funds, institutions, and enterprises; and information from the business register. Even the corporate turnover offers no indication of a remunicipalization, and in fact, public utilities have actually lost revenue shares: in 2012 they generated only slightly more than one-quarter of sales in the energy sector, even though they made up the majority of companies. 

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