Press Releases

Current and older Press Releases of DIW Berlin
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20 March 2002

Argentina: no long-term solution provided by free floatation of the peso. DIW Berlin recommends exchange rate bands

By allowing the peso to float freely at the beginning of this year, Argentina fundamentally changed its monetary policy. For the previous eleven years, the peso had been pegged to the US-Dollar by a currency board. In its current weekly report 12/2002, the DIW Berlin warns against this strategy. It also does not consider the free floatation of the peso to be a workable solution. The DIW instead suggests that a middle course: an exchange rate system, whic allows the exchange rate to fluctuate within a certain band similar to the former European Monetary System (EMS). On the one hand, this measure would contribute to a stable monetary policy. On the other hand, it would allow the central bank to devalue the peso in times of crisis and of considerable structural upheaval or to reduce the pressure on the peso through joint interventions. Argentina should co-operate with Brazil and the other Mercosur countries, with whose national economies it has extremely close trade relations and with whom Argentina could reach a credible agreement on price stability.

20 March 2002

Monetary Policy of the ECB: Maintain Current Course of Expansion

After the European Central Bank (ECB) only reluctantly reacted to the synchronous world-wide economic downturn, a further reduction in interest rates has become even more unlikely against the backdrop of the beginnings of an economic upturn in the Eurozone. Financial markets even expect an increase in interest rates. In its current weekly report 12/2002, the DIW Berlin warns against the repetition of former mistakes. Upswings in the economy have been repeatedly curbed by an anticipatory tightening of the monetary course whilst still in their infancy and thus preventing an improvement in the labour market through more growth. This negative experience should induce the ECB to stick to its current expansive monetary course. All the more so as there are no signs that inflation rates will increase in the Eurozone. In order to be able to maintain this course, unions and management in the Eurozone have to continue with their policy of moderate wages.

5 March 2002

Berlin has to continue its consolidation policy. DIW Berlin on the economic future of Berlin

Berlin has no other alternative but to continue its strict policy of consolidation. Despite the fact that cost-cutting measures greatly curb regional economic trends, the DIW Berlin advises strict compliance with these measures in its current weekly report 10/2002. However, no further cuts should be made in the budgets for education, science and culture, as these sectors have a promising future and stimulate economic demand and growth in Berlin. Financial resources, however, have to be used in a more innovative and efficient way than they have been up until present: the DIW Berlin considers the foundation of private universities to be an example of innovative funding.

12 November 2001

Euroframe: Prospects for the European Economies 2001/2002

The World Environment
· The September 11th attacks on the United States and the consequent combat against international terrorism have clouded the short-term outlook for the world economy.
· World economic growth had already slowed considerably from the final quarter of last year. Monetary tightening in reaction to persistent high growth rates in the US was partly responsible.
· A further deepening of the international cycle in the remaining part of the year seems unavoidable, while the previously expected recovery of the international economy will be delayed by at least one to two quarters to early 2002.
· Uncertainties surrounding this outlook are high. Our projection starts from the assumption that possible further attacks will not have major negative effects on sentiment, and that the oil supply from the Middle East will not be disrupted.

23 October 2001

Terrorist Attacks Reinforce Cyclical Downswing -
Recovery not Before Next Year

The economies of the United States and of the rest of the world were hit by the attacks of 11 September during a phase of pronounced cyclical weakness. Pro-vided there are no additional massive terrorist attacks, there is no extension of the conflict, and there is no reduction of petroleum supplies, a world-wide re-covery that also gives new impetus to world trade may be expected from the first half of 2002. A crucial factor for the cyclical recovery is the fact that in the industrialised countries economic policy had been expansionary already before the attacks and that additional stimulating measures were decided afterwards. In the United States, the current recessionary phase will be overcome early next year, and the economy will recover markedly in the course of the year. In Ja-pan, output fell noticeably during the first half of this year, and a recovery is not expected until the second half of next year. In the euro area, economic growth has slowed considerably since last spring. In the course of next year, the forces of upswing will gradually prevail, with exports and domestic demand gaining momentum.

26 September 2001

Prices for crude oil have levelled off, however uncertainty remains. DIW Berlin expects prices for crude oil to level off at the OPEC's set target

Prices for crude oil will probably soon again be levelling out between 22 to 28 dollars per barrel, a price span that is also favoured by the OPEC. However, prices are expected to level off at the upper edge of the span. In its current weekly report 39/2001 the DIW Berlin points out that such a price level may be too high in view of the current situation of the global economy. It is, therefore, also in the OPEC's interest to keep prices as low as possible.

5 September 2001

EU Eastern Enlargement can be financed - the pressure for reforms is growing. DIW Berlin presents EU budget scenarios for 2007 and 2013

The planned enlargement of the EU to include the twelve candidate countries can be financed without any problems: this is the conclusion that the DIW Berlin reaches in its current Wochenbericht 36/2001. Nevertheless, the Institute calls upon current EU members to begin now with the reform of structural and agricultural policy in the run-up to enlargement. Such reforms are long overdue and would be more difficult to carry out following enlargement.

25 July 2001

European research and innovation systems

DIW Berlin comments on the situation of private and public research institutions

Innovation depends on cooperation between different institutes and the business sector. Division of labour between subsidised institutes on the one hand, which are more heavily engaged in pure research, and private service industries on the other which are more focussed on rendering production-related consultancy and implementing services is a precondition for achieving a higher level of innovation in Europe. The DIW Berlin has come to this conclusion in its recent weekly report 30/2001 based on its study of research and innovation systems in six European countries.

25 July 2001

Housing conditions of foreigners in Germany

DIW Berlin: Despite improvements there is still a large gap in housing conditions between German households and foreign households in Germany

Housing conditions for foreigners have clearly improved since the end of 1985 in West-Germany. At that time about 15% of foreign households had no bathroom. This number fell to 2% in 1998. In addition to that the number of households without central heating fell to 16% which is a cut by half. Each foreigner has about 31 square meters at his disposal, three square meters more than in 1985.

10 July 2001

Germany's economy extremely slowing down.
Economy is only growing at a rate of 1% this year.
DIW Berlin presents summer-baselines of 2001/2002

The German GDP will only grow by 1% this year. A noticeably economic recovery and an economic growth of 2,3% can not be expected until next year. This conclusion is reached by the DIW Berlin in its summer-baselines on the economic development 2001/2002. The eurozone, too, is expected to show a slower economic expansion this year; the GDP will only increase by 1,9%. An economic recovery is not expected before 2002. The aggregate output will then increase by 2,5%. In order to lastingly overcome the economic downturn the DIW Berlin suggests a four-point strategy which is focusing on monetary policy, wages policy and financial policy.

27 June 2001

European Economy lacks dynamics
DIW Berlin: Economic growth rate will continue to slow down

The economic downturn in the eurozone has continued in the first quarter of 2001. In its weekly report 26/2001 the DIW Berlin concludes that the seasonally adjusted real gross domestic product has only increased by 0,5 % in the first quarter of 2001; which boils down to an annual growth rate of 2%. The accelerated rise in prices, which was a bar to the spending power of private households and investments, led to an economic slow-down. Yet, the downward trend of the US economy is an additional drain on the European economy. Consumer confidence and growth indicators suggest that economic growth will even continue to decelerate.

7 June 2001

US-American Economy in a downturn
Economic policy takes active countermeasures. DIW Berlin judges the Fed's monetary policy as exemplary

The determined and expansionary measures taken by the US-American economic policy give rise to the assumption that the heavy slide in the economic activity will not result in a recession but will be overcome as early as this year. This conclusion was reached by the DIW Berlin in its latest weekly report 23/2001. It is above all the Fed's promotion of growth and employment that gives a positive impetus to the economy.

30 May 2001

Housing Market in Russia: A disappointing Résumé

Conditions on the Russian housing market have barely improved since the transformation of the country. Although the housing market grew by 13,8% to 2761 Mio m² in the 1990s there was also an increase in the number of households (homecoming soldiers, increasing divorce rates). Since flats in most regions are no longer distributed by the state there are hardly any reliable data on the number of persons seeking accommodation. A newly shaped housing market as well as extremely devious and partly shady methods determine the distribution of flats. The poor quality of the buildings and lacking maintenance are furthermore factors that contribute to the housing shortage. Although almost 90% of all residential buildings have been constructed during the last 40 years a great number of them has already fallen into disrepair

10 April 2001

World wide economic activity is slowing down

The global expansion has slowed down noticeably since the middle of the year 2000. At the same time, a phase of especially high dynamics came to an end. On the one hand, it was decisive that the increase in oil prices stemmed economic activity. On the other hand, monetary policy slowed down in order to reduce the high pace of the economy by the middle of the year and to decrease accelerated inflation. In this respect, smaller economic expansion was wanted.

14 March 2001

Rise in oil-prices depresses private consumption in the second half of 2001 in Germany

Despite tax reform: stimulation of economy put at risk in 2001

Germany faced a slow increase in consumption last year. Particularly in the second half of 2000 consumption slowed down. This was due to weaker income impulses which were caused by weaker income impulses and an enormous rise in oil prices leading to extra costs in private households. Therefore, the private consumption only increased by 1,6 % throughout 2001.

7 March 2001

DIW reckons that crude oil will cost
between 22 to 28 dollars per barrel

The OPEC will succeed in keeping the prices for crude oil between 22 and 28 dollars per barrel. This conclusion is reached by the DIW in its weekly report. The OPEC's announcement to clearly cut back crude oil production as well as low stocks, particularly in the USA, have stopped a further drop-off in prices.

28 February 2001

Effective Support of International R&D activities

International liaison-offices R&D co-operations give a new impetus to small and medium sized businesses.

In its weekly report the DIW Berlin took positive stock of the initiative International Liaison Offices Research-Co-operations, an initiative which was started by the Federal Ministry of Education and Research in 1995 and which was continued by the Federal Ministry of Economics in 1999.

28 February 2001

Long-term, full time employment: most frequent form of employment in Europe

DIW Berlin: Danish labour market could be an example to Germany

There is no erosion of the average contracts of employment in the German labour market states the DIW Berlin in its latest weekly report. The part time occupations and temporary jobs hold an increasing proportion in the labour market, though, not at the expense of full time jobs. More and more people work part-time, a tendency which can be observed throughout Europe.

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