Press Releases

Current and older Press Releases of DIW Berlin
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12 December 2018

Germany’s economic boom is cooling off

According to DIW Berlin estimations, the German economy will continue to grow noticeably over the next two years. However, the economic boom is over as economic momentum is likely to cool off. DIW Berlin thus confirms its estimations from the late summer that the growth rate of the German economy is gradually returning to normal, overlaid by non-recurring effects. However, DIW Berlin is lowering its forecast for 2018 to 1.5 percent.

At present, the economic situation is unusually unclear, partly due to developments in the automotive industry. Motor vehicle manufacturers are having major problems certifying their vehicles in accordance with the new exhaust and consumption standards. Certification is a prerequisite for selling their vehicles in Europe. As a result, fewer cars were sold both domestically and abroad in late summer, which led manufacturers to cut back production. This also curbed exports, investments in the vehicle fleet, and private consumption.

The production losses are expected to be made up at least in part in the winter half-year. However, this forecast is subject to unusually high uncertainty: it is quite possible that there will be no further recovery and that the growth momentum this year and next will be weaker than forecast. At present, GDP is expected to grow by 1.6 percent in 2019. Frequently voiced concerns that the German economy will overheat are thus likely finally over. In 2020, the growth rate is likely to be 1.8 percent—but it will be a good 0.4 percentage points stronger due to a higher number of working days.

31 October 2018

Immigration from other EU countries has increased Germany’s economic growth since 2011

Since 2011, over five million immigrants from other EU countries have immigrated to Germany – A DIW Berlin simulation shows that this immigration has increased GDP growth by an average of 0.2 percentage points every year – More needs to be done to improve employment opportunities for the highly qualified, for example by simplifying the procedures for recognizing foreign qualifications

Immigration from other EU countries increased Germany’s GDP growth by an average of 0.2 percentage points every year between 2011 and 2016—and for some years, such as 2015, the high point of EU immigration, by even more (0.3 percentage points). Immigrants filling open jobs increases overall economic employment, leads to additional consumer demand, and avoids bottlenecks in the labor market, which would have led to higher production costs and prices and reduced growth accordingly. These are the findings of Marius Clemens, economic researcher at the German Institute for Economic Research (DIW Berlin), and his co-author Janine Hart from the University of Potsdam, which have been published in their new study.

27 September 2018

Joint economic forecast autumn 2018: Upturn loses momentum

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

6 September 2018

German economy continues to grow moderately but risks remain

According to DIW Berlin estimations, the German economy will continue on its current growth path over the next three years. This confirms the forecast from early summer that economic output will grow at a more moderate pace than previously. DIW Berlin’s forecast indicates growth of 1.8 percent for 2018, 1.7 percent for 2019, and 1.8 percent for 2020.

In contrast to the strong export performance of the previous year, the domestic economy is now primarily driving growth, with both consumption and the construction boom as contributing factors. Thus, the labor market situation remains favorable and the unemployment rate is likely to fall below the five percent mark as early as next year. Wage increases are also stronger than in previous years and enabling households to earn somewhat more money—even after deducting inflation, which is now higher.

8 August 2018

Low tax burden for passenger cars in Germany; reform of vehicle and fuel taxation needed

In a systematic European comparison of taxes and duties on passenger cars, Germany is in the lower third – Taxes on passenger cars neither raise enough revenue nor provide sufficient incentives for less polluting passenger car traffic.

Germany needs to reform its passenger car and fuel taxation and make a gradual increase in the diesel tax a priority. This is the conclusion reached by Uwe Kunert, a transport economist at the German Institute for Economic Research (DIW Berlin) who systematically analyzed and compared passenger car tax systems for 30 European countries (EU-28, Norway, and Switzerland) in a new study. “The comparison shows tax systems which vary greatly in their design, use many different assessment bases, and, as a result, have quite different tax burdens,” said Kunert. The total sum of taxes and duties paid when purchasing (value-added tax, registration tax and fees), maintaining (motor vehicle tax, insurance tax), and using (taxes on fuel) a new mid-size car with an annual mileage of 15,000 kilometers is between 1,200 and 2,000 euros for most of the countries surveyed. In countries with even higher tax totals, the registration tax—which does not exist in Germany—is the determining factor. Moreover, the sample calculation shows that in 26 countries, vehicles with a diesel engine have a lighter tax burden than those with a gasoline engine.

15 June 2018

The German economy is slowing down somewhat

According to DIW Berlin estimates, the German economy should grow by 1.9 percent this year and 1.7 percent next year. The GDP growth forecast has thus decreased by 0.5 percentage points for this year and by 0.2 percentage points for the coming year compared to DIW Berlin’s March forecast. Essentially, this reflects the markedly increased uncertainty concerning the economic policy environment that is affecting investment activity worldwide and curbing exports in particular. In addition, the start of 2018 was weaker than was expected in March due to some temporary factors: high rates of sick leave, broad-based strikes, and an above-average number of holidays.

26 April 2018

DIW Economic Barometer April 2018: upswing continues at a slower pace

The Economic Barometer of the German Insitute for Economic Research (DIW Berlin) remains high but is signaling a weakening of the growth rate. It reached a score of 126 points in the first quarter and 121 points in the second quarter, well above the 100-point mark that stands for average growth.

19 April 2018

Germany’s Economic Experts Raise Forecast Slightly

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

28 March 2018

DIW Economic Barometer March 2018: economic boom continues

The German economy is expected to have gained a good 0.7 percent in the first quarter of 2018 compared to the final quarter of 2017. This is signaled by the Economic Barometer of the German Institute for Economic Research (DIW Berlin), which rose from 113 to 118 points. It is still well above the 100-point mark, which stands for average growth.

21 March 2018

Short-term benefits for Germany and the euro area from a U.S. interest rate hike

German Institute for Economic Research: No reason for exaggerated concern about an economic slowdown

Euro area states can benefit from an interest rate increase in the U.S. in the short term, according to the findings of a current study by the German Institute for Economic Research (DIW Berlin). Thanks to the devaluation of the euro, their exports would rise to the extent that they are able to overcompensate for the negative demand effect from the U.S. This holds true for Germany in particular. In the medium term, interest rates in the euro area would follow those of the U.S., leading to a decline in growth rates there as well. “The positive effect would only be temporary. But our findings should reduce concerns that a hike in the U.S. benchmark interest rate would result in spillover effects and weaken the euro area economically,” said DIW economist Max Hanisch.

21 February 2018

AfD received more votes in the parliamentary election in rural areas with aging populations

DIW Berlin study analyzes the correlation between the AfD's vote performance and different economic and sociodemographic variables at an electoral district level – The AfD performed well in western German electoral districts where there are many employees in the manufacturing industry and where incomes are low – In the eastern districts they performed better where there is a large share of elderly residents and a high density of craft businesses

DIW Berlin president Marcel Fratzscher and co-authors Christian Franz and Alexander Kritikos analyzed the correlation between the Alternative for Germany’s (Alternative für Deutschland, AfD) performance in the last parliamentary election and seven economic and sociodemografic structural variables. Certain characteristics, such as the unemployment rate or share of non-German citizens in each electoral district, appear to barely play a role. There are positive correlations for other factors, meaning that these characteristics are especially pronounced in electoral districts where the AfD performed well. The patterns are different in the eastern and western parts of Germany.

7 February 2018

Household electricity prices: major savings possible by switching tariffs

Retail electricity prices develop very differently depending on the provider and the tariff – Basic tariffs from default providers increased significantly between 2007 and 2014 while the most affordable tariffs offered in the market remained mostly constant – Providers passed the cost savings from falling wholesale prices on to households to varying degrees

The average electricity prices for German households have been rising almost constantly since 2007, but the rise in retail prices has affected customers to different degrees. While the basic tariffs offered by default providers—the most expensive tariffs available—increased by 50 percent by 2014, the most affordable tariffs on the market generally remained unchanged. The default providers are legally required to sell energy in the form of a default tariff to all households in their respective service areas. If consumers would switch from a default tariff to a cheaper tariff from a different provider, they would save a lot of money. In 2014, assuming average power consumption (2,800 kilowatt hours per year), it would have been possible to save an average of almost 400 euros. Nevertheless, only a relatively small number of households switch providers.

1 February 2018

Company productivity increases with more knowledge-based capital

First study using official company records — more knowledge-based capital increases productivity — some sectors are already investing more in knowledge-based capital than in machines and buildings — economic policy must take a holistic approach towards investments

Every year in Germany, around 200 billion euros are invested in knowledge-based capital, such as research and development (R&D), software and databases, marketing and advertising, or technical design. These investments do not only increase company productivity, however. They also make investments in traditional capital goods, such as machinery or buildings, more effective. This is the conclusion reached by the German Institute for Economic Research (DIW Berlin) on the basis of a dataset containing almost two million official company records. “We found that, regardless of whether investments are made in R&D, organizational capital, or software, the positive effects on productivity are quite similar,” said Alexander Schiersch, who led the project.

31 January 2018

DIW Berlin Economic Barometer January 2018: the German economy is soaring

The German economy continues to soar: the German Institute for Economic Research’s (DIW Berlin) Economic Barometer is at its highest reading in seven years. The index score for the first quarter landed at 118 points, an increase of almost four points compared to the last quarter of 2017. The Economic Barometer is thus well-above the 100-point mark that corresponds to the long-term average growth of 0.3 percent. Accordingly, the German economy is likely to grow more vigorously in the winter—by an estimated 0.7 percent in the first quarter of 2018 after a 0.6 percent growth in the fourth quarter of 2017, in each case compared to the previous quarter.

31 January 2018

The new grand coalition’s work program: DIW Berlin says there is still much to improve

In important areas such as tax policy, education, and energy, the future grand coalition must be considerably more ambitious – The need for reform in Germany is not being addressed sufficiently

Germany’s next government will most likely once again be a grand coalition. However, the results of the preliminary coalition talks between the Union parties and the SPD, which serve as a basis for the current negotiations, do not sufficiently address Germany’s need for reform, as many scientists at the German Institute for Economic Research (DIW Berlin) have concluded. “Good approaches came from the talks, but as far as Europe, tax policy, education, investments, and other areas are concerned, vision and ambition are lacking,” said DIW President Marcel Fratzscher. “The actual coalition talks should do more than just endorse the agreement that has been reached; they should be used to improve many aspects of it as well. The German economy may be doing well, but the country is in urgent need of reforms. Now is the time to initiate these reforms before another four years are lost.”

18 January 2018

DIW Women Executives Barometer 2018: the gender quota for supervisory boards is effective, development on executive boards has almost reached a standstill

DIW Berlin has analyzed the development of the proportion of women in over 500 businesses – There is no indication that the gender quota is affecting executive boards – Banks and insurance companies in particular need to catch up – Politicians and companies must work together

The 30 percent gender quota for supervisory boards is effective: the proportion of women on the supervisory boards of a good 100 companies in Germany which have been subject to the quota since 2016 increased to an average of 30 percent by the end of 2017, almost three percentage points more than the previous year. The German Institute for Economic Research's (DIW Berlin) Women Executives Barometer shows for the first time that numerous companies are increasing the proportion of female members serving on their supervisory board beyond the specified minimum.

17 January 2018

Franco-German proposal for a reform of the European monetary union: building a euro area with more risk-sharing and more discipline

Joint press release of the German Institute for Economic Research (DIW Berlin) and ifo Institute – Leibniz Institute for Economic Research at the University of Munich

Fourteen economists from France and Germany, including Marcel Fratzscher (DIW Berlin) and Clemens Fuest (ifo), are presenting a reform package aimed at making the euro area more robust and more resilient to crises as well as allow for sound public finances and stronger economic growth.

After nearly a decade of stagnation, the euro area is finally experiencing a robust economic recovery. At the same time, it remains financially vulnerable, economically and politically divided, and seemingly unable to deliver its full growth potential. A reform of the financial, fiscal, and institutional architecture of the monetary union is urgently called for.

16 January 2018

Gross income gap has increased since reunification

The top 10% of income earners in Germany earn almost as much as the middle 40% – the top 1%’s share of national income has increased from eight to 13 percent since 1995.

The share of national income belonging to the top 1% of income earners has grown significantly in Germany since the mid-1990s, while the share earned by the bottom 50% has significantly decreased. These are the main findings of a study by DIW Berlin economist Charlotte Bartels based on income tax data for Germany for the World Inequality Report.

12 January 2018

Construction volume forecast: End of the new housing sector boom

Construction industry continues very positive development – more room for modernization and renovation of existing buildings – construction prices rise sharply

The construction sector cycle will continue its upward course in the next two years according to the forecast of the German Institute for Economic Research (DIW Berlin), which makes its annual prognosis of construction volume on behalf of the Federal Ministry for the Environment (Bundesbauministerium, BMUB) and the Federal Institute for Research on Building, Urban Affairs and Spatial Development (Bundesinstitut für Bau-, Stadt- und Raumforschung, BBSR). However, investment will concentrate more on renovation and modernization, swinging away from new construction. Commercial and public-sector construction activity is expected to continue its moderate pace of increase.

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