Current macroeconomic situation in Germany Martin Wenke Niederrhein University of Applied Sciences Faculty of Business Administration and Economics M

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Current macroeconomic situation in
GermanyMartin WenkeNiederrhein University of
Applied SciencesFaculty of Business
Administration and EconomicsMönchengladbach,
GermanyNiederrhein Institute for Regional and
Structural Research (NIERS)Institute of Business
Ethics and Sustainability (EthNa)Institute for
Applied Sciences (IAW)
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Highlight 2014 recent news headlines (F.A.Z.)

• September Business sentiment slumps again and
  more than expected
• July Monthly exports first time above 100 bill
  threshold
• August High order plus of industry dampens
  recession fears
• September Higher purchasing power of households
  wages grew faster than prices
• Summer Euro zone inflation close to zero
• Summer ECB under pressure
• Summer Germanys strong industry
• July Unemployment growing
• Traffic jam blues

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Part III

• Business Cycles and Keynesian Economics

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Macroeconomic Theory and Time Horizon
Output
Long term production capacity/potentialneoclassic
al theory
Short term, actual measured production Keynesian
theory
Time
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Economic fluctuations Business CyclePhases of
a Cycle
change ofreal GDP
upper turning point peak, boom
amplitude
expansion
contraction
lower turning point, trough, recession
cycle
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Business Cycle Theoretical basics of Keynesian
model
Medium/long term view (Neoclassical
Macroeconomics) Aggregate Supply (max)
Production Capacity f(Labour, Capital,
Land) Short term view (Keynesian
Macroeconomics) Aggregate Supply (current)
f(Aggregate Demand) Aggregate Demand (GDP)
Private Consumption (PC)
Governmental Expenditures (GE)
Capital Formation (real Inv.) (CF)
Export (EX) - Import (IM)
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Business Cycle Theoretical basics of Keynesian
model model of the entire economy
() (-) (-) () PC f(PDY, i,
UR, CCI)
(/-) (-) ()
(-) (-) GE f(GDPc/GDPa, i, TXR, AGD, GDL)
GDP
() (-) () CF
f(GDPc/GDPp, i, BSI)
() (-) (-) () EX
f(WT, CER, TOT, IICP) -IM f(PC, CF, EX)
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Highlight Managers sentiment and their
confidence in Germanys economy - results of Ifo
poll 2005 100
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Highlights Current economic situation in Germany
The Ifo Business Climate Index is based on ap.
7,000 monthly survey responses of firms in
manufacturing, construction, wholesaling and
retailing. The firms are asked to give their
assessments of the current business
situation and their expectations for the next
six months. They can characterise their situation
as good, satisfactorily or poor and their
business expectations for the next six months as
more favourable, unchanged or more
unfavourable. The balance value of the current
business situation is the difference of the
percentages of the responses good and poor,
the balance value of the expectations is the
difference of the percentages of the responses
more favourable and more unfavourable.
The business climate is a transformed mean of
the balances of the business situation and the
expectations.
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Business Cycle Application Autumn 2014 Results
of Joint Economic Forecast Main economic
indicators
Component 2010 2011 2012 2013 2014 2015
GDP, real 4,1 3,6 0,4 0,1 1,3 1,2
Unemployment rate 7,7 7,1 6,8 6,9 6,7 6,8
Employment 1 000 p 41 020 41 570 42 033 42 281 42 605 42 653
Inflation 1,1 2,1 2,0 1,5 1,0 1,4
Unit Labor Costs -1,5 0,4 3,1 2,2 1,8 2,3
Current governm. Debt of GDP -4,0 -0,8 0,1 0,3 0,3 0,1
Trade surplus in of GDP 5,7 6,1 7,1 6,8 6,9 6,6
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Business Cycle Application Autumn 2014 Results
of Joint Economic ForecastFinal Demand
Components, constant 2010 prices, in (Lundberg
growth contribution)
Component 2013 2014 2015
GDP 0,1 1,3 1,2
Private Consumption 0,8(0,5) 0,8 (0,5) 1,4 (0,9)
Governmental Expenditures 0,7(0,1) 0,9 (0,2) 1(0,2)
Capital Formation -0,7 (-0,0) 3,2 (0,8) 2,7 (0,4)
Exports 1,6(0,7) 3,2 (1,5) 4,4(2,0)
Imports 3,1 (-1,2) 4,2 (-1,7) 5,7(-2,3)