Are you hopeful for 2019
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Association of German Banks (BdB)
In 2018, the German economy and some companies took a beating. Punitive tariffs, uncertainties and geopolitical tensions all influenced events - with consequences for exports and profits, interest rates and share prices. What will 2019 bring? Hans-Walter Peters, President of the Banking Association and spokesman for the personally liable partners of the private bank Berenberg in Hamburg, gives an overview.
Economy: The trade conflicts emanating from the USA already left their mark on the German economy in 2018, says Peters. The extremely strong upswing was clearly dampened this year. "For 2019 I am still cautiously hopeful." The negative consequences of US trade policy would make themselves felt; on the other hand, the economy in many emerging countries should recover. "For Germany, the bank president is expecting growth of around 1.5 percent, in his view only a moderate value." As a school grade, this would be a "satisfactory" ".
Economic policy: The bank president is not very optimistic about the beginning of the year. "The next few months can be rough. In the short term, I don't see any easing of the trade conflict with the USA." Germany and the EU would still have to react prudently and find convincing answers. Very important from Peter's point of view: "A drift into a protectionist spiral - at the end of which everyone would lose - must be prevented in any case." But there is a ray of hope: "Because the US trade policy is gradually also burdening the US economy, I am relying on the common sense of all negotiating partners."
Labor market: There is good news for 2019 here. Fortunately, thanks to robust domestic demand, the global trade conflicts would not have any serious consequences for the German labor market, says Peters. "Employment growth continues and will hit new all-time highs." But: partly because of the shortage of skilled workers, the increase will have a slightly lower cycle rate than in previous years. The bank president estimates that the number of unemployed could "fall to an average of around 2.2 million" in 2019. "That would be another success story."
Financial markets: According to the bank president, investors will have to be prepared for continued turbulent times: "The political uncertainties will continue to determine what is happening on the financial markets in the near future. Judging by the economic fundamentals, however, he no longer considers the Dax German share index to be highly valued after the last price corrections. Peters is optimistic for 2019: "If economic development stabilizes, the Dax could gain ground again next year." Strong nerves are helpful for equity investors, especially in view of the numerous uncertainties - from the trade conflicts to Brexit to financial policy in Italy.
Interest: The bank president also has bad news for traditional savers, they will continue to receive little for their savings: "The interest rate environment is unlikely to change much in 2019. The ECB continues to ignore all warnings from all sides and is postponing the exit from negative interest rates on the back burner. In my opinion, that's wrong. "
Banking market: 2018 was not a good year for German banks. The share prices of the large financial institutions Deutsche Bank and Commerzbank fell dramatically, business weakened. And as soon as nothing will change: "2019 will remain challenging for the banks", Peters expects. "Low interest rates, regulation and necessary investments in digitization have their price." But strong banks are of central importance for a strong economy. "That is why it is important that we continue to work in 2019 to make our banks internationally competitive." For Peters, for example, this includes a regulatory check. "Weaknesses, contradictions and obvious exaggerations in regulation must be reduced without compromising on stability."
Source and contact address:
Association of German Banks (BdB)
Burgstrasse 28, 10178 Berlin
Telephone: (030) 16630, Fax: (030) 16631399
Email: [email protected]
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