Press Release Press Release


November 29, 2019

Commerzbank Research: Slow recovery in Germany

  • Chief economist Jörg Krämer: "The competitiveness of Germany's industry sector has suffered in the last ten years"
  • No significant upturn in China
  • ECB President Lagarde maintains the status quo in uncertain times
  • DAX year-end forecast at 13,700 points

An upward movement with below-average growth rates is more likely for Germany and the euro area in 2020 than a recession or a classically strong recovery. "Conflicting economic factors speak for such a bloodless upward movement," says Commerzbank's chief economist Jörg Krämer. Although loose monetary policy and a probable partial settlement in the trade dispute are creating the economy. At the same time, however, growth will be slowed by fears of a renewed flare-up of the trade war and by a lack of recovery in China. For the full year 2020, Commerzbank economists expect Germany to grow by 0.8 percent, which is only 0.4 percent adjusted for the unusually high number of working days.

"Our major concern - more than the economy - is the competitiveness of Germany as a production location. For two years the economy in this country has been growing at a weaker rate than the rest of the euro area," said Krämer. "The erosion of competitiveness over a number of years is beginning to show itself."

IN 2020 Commerzbank economists expect growth of 0.9 percent in the euro area. This is half a percentage point more than in Germany, but much less than in previous years. A slow economic upward movement and the continued failure to meet an inflation target of just under two per cent would probably have prompted former ECB President Mario Draghi to ease monetary policy again. But for the first time in a long time, the euro economy has grown stronger than the ECB expected. In addition, new ECB President Christine Lagarde maintains a consensual style of leadership. "In doubt, she maintains the status quo," Chief Economist Krämer said. He does not expect further easing of monetary policy for 2020, unlike in the past. The ECB will also continue to pursue the policy of negative interest rates for many years to come. The vast majority of the so-called "pigeons" in the Governing Council also support this.

In the short term the Dax could grow even further if Trump and the Chinese agreed economically. "But if it becomes clear in the course of the year that the trade conflict is not fundamentally resolved and the economy is only recovering little, the mood could tilt and the Dax could recede again. Our end-of-year target for the Dax is therefore deliberately conservative with 13,700 points," says Krämer. Commerzbank economists tend to expect higher prices for EUR-USD next year. The year-end forecast is 1.18.

Bernd Reh +49 69 136-46971

About Commerzbank
Commerzbank is a leading international commercial bank with branches and offices in nearly 50 countries. The Bank’s two business segments – Private and Small Business Customers and Corporate Clients – offer a comprehensive portfolio of financial services precisely tailored to their customers’ needs. Commerzbank transacts approximately 30% of Germany's foreign trade and is the market leader in German corporate banking. The Bank offers its sector expertise to its corporate clients in Germany and abroad and is a leading provider of capital market products. Its subsidiaries, Comdirect in Germany and mBank in Poland, are two of the world’s most innovative online banks. With approximately 800 branches going forward, Commerzbank has one of the densest branch networks in Germany. The Bank serves more than 11 million private and small business customers nationwide and over 70,000 corporate clients, multinationals, financial service providers, and institutional clients worldwide. Its Polish subsidiary mBank S.A. has around 5.6 million private and corporate customers, predominantly in Poland, but also in the Czech Republic and Slovakia. In 2018 Commerzbank generated gross revenues of €8.6 billion with approximately 49,000 employees.

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