The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Institutes: The recovery of the German economy is losing momentum
The leading German economic research institutes have lowered their forecasts for German economic development compared to the spring. “The Corona crisis is leaving its mark on the German economy and is affecting it harder than assumed in the spring,” they explained. In their autumn report, the economists now expect gross domestic product (GDP) to shrink by 5.4 percent in 2020, after having predicted a 4.2 percent decline at the beginning of April. The institutes lowered their growth forecast for 2021. You are now assuming 4.7 percent growth. In their spring report, the economists had forecast 5.8 percent.
Scholz: Institute forecast proves the effectiveness of political measures
Federal Finance Minister Olaf Scholz (SPD) assessed the statements of the most recent autumn report by the leading German economic research institutes as confirmation of the direction taken by the federal government. “The forecast of the institutes shows good prospects. This proves once again that our policy is working,” he said. The upswing comes because the government reacted “quickly and with oomph” to the drastic economic slump.
Federal Government: The recovery process is more cautious
The Federal Government has emphasized that the recovery process in the German economy is now less dynamic than it was at the end of the second quarter. “The German economy continues to recover,” said the Ministry of Economic Affairs in its latest monthly report. The national and international infection rate continues to burden the economic recovery. “After the first strong recovery in May and June, the rest of the recovery process is more subdued.”
Eurozone-Industry continues recovery in August
In August, industry in the euro area continued its recovery from the slump in the wake of the Corona crisis, albeit with less momentum. As reported by the Eurostat statistics agency, production (excluding the construction industry) rose by 0.7 percent compared to the previous month, seasonally adjusted. Economists polled by Dow Jones Newswires had expected an increase of this magnitude.
Daly: Fed’s new framework can reduce inequality
The Fed’s new monetary policy framework can be an important tool in reducing economic inequality in the US, according to the President of the Federal Reserve Bank of San Francisco, Mary Daly. “Systemic prejudices about race, ethnicity, gender and class have led to unequal access to education, work, income and wealth,” Daly said in a speech. “These inequalities have increased over generations, as children born in poor or low-income households carry this disadvantage into adulthood and pass it on to their children.”
Before meeting Merkel, criticism of the ban on accommodation becomes louder
Before the Bund-Lnder summit in the Federal Chancellery, criticism of the controversial ban on accommodation is growing louder. North Rhine-Westphalia’s Prime Minister Armin Laschet (CDU) complained in the ARD morning magazine, “that many citizens do not understand the rules and they tend to weaken acceptance.” There is a lack of clarity.
The federal and state governments are planning tougher corona measures
In view of the increasing number of corona infections, the federal and state governments are considering stricter measures in the fight against the pandemic. The draft resolution of the Chancellery for the top-level consultations provides for an extended mask requirement for corona hotspots, participant restrictions for events, curfew in restaurants and the closure of bars. These restrictions should apply where the number of new infections within seven days exceeds the threshold of 35 per 100,000 inhabitants, as can be seen from the paper available to the AFP news agency.
Altmaier is considering further corona aid for companies
In view of the worsening corona crisis, Federal Minister of Economics Peter Altmaier (CDU) is preparing further help for companies particularly hard hit by the restrictions. In particular, the hotel and restaurant industry should be taken into account, as Dow Jones Newswires learned from the ministry. But the event industry as well as trade fair and exhibition companies are to receive further support. First the Funke newspapers reported on the plans.
Federal government warns aviation industry against cutting the research budget
Before today’s round table on the aviation industry, the federal government appealed to the aviation industry not to forego further research projects during the corona crisis. “We are seeing that companies are saving money on research and development right now in order to save liquidity,” said the German government’s aerospace coordinator, Thomas Jarzombek (CDU), to journalists. This is “a dangerous development”.
Unprecedented global reduction in CO2 emissions due to corona pandemic
Climate researchers have determined an “unprecedented decrease in CO2 emissions” worldwide for the first half of 2020. Compared to the same period last year, 1,551 million tons less carbon dioxide were emitted, according to a study by an international research team published in Nature Communications magazine. Accordingly, the corona pandemic caused a more pronounced decline than the financial crisis or the Second World War.
IEA warns of a slow recovery in the oil market
From the perspective of the International Energy Agency (IEA), the oil market is overcoming the glut of supply that threatened to paralyze the entire industry a few months ago, but the skyrocketing number of infections is jeopardizing this recovery. In its monthly oil market report, the IEA reported that global oil supplies in September fell to levels 9 percent below pre-pandemic levels.
+++ economic data +++
US / MBA Market Index Week ended Oct 9 -0.7% to 798.9 (previous week: 804.7)
US / MBA Purchase Index Week ended Oct 9 -1.6% to 311.1 (previous week: 316.0)
US / MBA Refinance Index Week ended Oct 9 -0.3% to 3,612.3 (previous week: 3,622.3)
DJG / DJN / AFP / apo
(END) Dow Jones Newswires
October 14, 2020 07:30 ET (11:30 GMT)