Erste Asset Management

Germany remains Europe’s driving economic power

Germany remains Europe’s driving economic power
(c) iStock

Germany is not only the largest, but also one of the strongest economies in the Eurozone and the EU. This is reflected, among other things, in its stable economic growth. In 2017, Germany’s GDP increased by 2.2 per cent compared to the previous year, only slightly less than the total Eurozone growth of 2.4 per cent.

Despite the risks posed by the ongoing trade wars, forecasts predict a comparable growth rate for the current year, with the International Monetary Fund (IMF) expecting a GDP increase of 2.2 per cent in 2018. Germany was already well on the way to achieving this goal in the first half of the year: German economy grew by 0.4 per cent in Q1 compared to the previous quarter; Q2 saw growth of 0.5 per cent. The DIW Institute now expects 0.4 per cent growth for the third quarter.

While higher energy prices have recently dampened consumer sentiment somewhat and inflation remained at a comparatively high level of 2.0 per cent in August, the sentiment among exporters has improved for the second consecutive month. The industry’s Export Expectations indicator, calculated by the ifo Institute on the basis of a survey, rose by 0.6 to 14.4 points in August. Although the number of unemployed individuals in Germany rose to 2.351 million in August, this is the lowest figure for this month since 1991.

One of the German economy’s key factors is the current account. This balances all imported and exported goods and services in an economy against each other. If there is a surplus in a country’s balance, it exports more than it imports. In case of a deficit, on the other hand, more goods and services are imported than exported, i.e. more is consumed than is produced in the country itself. In regards to this balance, Germany is likely be the world leader yet again in 2018, as the German ifo Institute forecasts a current account surplus of 262.5 billion euros (USD 299bn) for the entire year. This puts the country in first place, followed by Japan at a comfortable distance with 200 billion dollars trade surplus.

German industry positive about surplus, IMF and EU Commission skeptical

The reason for Germany’s large current account surplus is the country’s export strength, with the German industry seeing the situation in a positive light. “[The surplus] highlights the performance of German companies and the attractiveness of their products – in a currently difficult international environment, no less,” said Volker Treier, Head of Foreign Trade of the German Chamber of Industry and Commerce (DIHK).

The IMF and the EU Commission, however, are skeptical. The Commission considers a continuous surplus of more than 6% of GDP a threat to stability, owing to the disparity between countries with surpluses and countries with deficits that are indebted. According to the ifo Institute, Germany’s current account constitutes 7.8 per cent of GDP in 2018. Since 2011, the current account surplus has contributed more than six per cent to Germany’s GDP.

Germany has a particularly strong goods trade balance, which is also a thorn in the side of other countries. In recent months, US President Donald Trump has already repeatedly threatened punitive tariffs on Germany’s no. 1 export product, cars. So far, however, he has not followed through on the threats, and after his meeting with EU Commission President Jean-Claude Juncker in July, it is unlikely that he will anytime soon. Under these considerations, it looks like smooth sailing for the German economy for the time being.



Forecasts are not a reliable indicator for future developments.


Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website A summary of the investor rights is available in German and English on the website and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.

Share post:
Exit mobile version