After two years of downturn, the forecast for German growth this year had perked up to 0.3%. This week the government is now projecting zero percent.
DB2
1 Like
The IMF is currently predicting the US economy to grow 1.8% in 2024.
https://www.reuters.com/business/imf-cuts-growth-forecasts-most-countries-wake-century-high-us-tariffs-2025-04-22/
DB2
2025 (v. 2024) right?
Yes, the IMF lowered its 2025 U.S. growth forecast to 1.8%, down from its January estimate of 2.7%.
Pete
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My typo. The forecast is for 2025.
And 1.8% is still more than double the forecasted growth for the EU.
I find it a little odd that according to reports people/institutions are moving money out of the US to lower growth areas such as the EU.
DB2
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So is it 1.8% or zero?
âGermany sees no growth - blames Trump tariffs.â
Never let a crisis go to waste.
ralph
The IMF forecasts 1.8% for the US, but upcoming forecasts certainly could go to zero.
Pete
[quote=âDrBob2, post:4, topic:115853â]
I find it a little odd that according to reports people/institutions are moving money out of the US to lower growth areas such as the EU.
[/quote]
Is it really that odd? Has Germany alienated its allies? Have they casually, off the cuff,
mentioned they want to make Switzerland Deutschland South? 150% tariffs on their biggest trading partners? I have to believe that many now seek safety for their money and some semblance of consistency in monetary policy. I worked for a CIO who once said if you donât like the way things are to âvote with your feetâ. Indeed, we are now seeing that on a worldwide scale.
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It may depend upon your time frame, but if one is a growth oriented investor then putting money in a zero-growth economy isnât a great move. And if you think weâre headed into a recession, that is going to be world-wide impacting Europe and developing economies.
DB2
I guess a combination of worldwide recession plus the start of a long term real decline in the value of the dollar would lead a prudent investor to invest in international assets?
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I would go with the opposite of that strategy. Global recessions hit places such as Mexico harder than the US. In addition, a cheaper dollar is good for all those large US multinational companies (overseas profits get repatriated at a higher rate).
DB2
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I notice that Dow Chemical and Celanese have reported deficits this quarter.
Once Germany was a leader in chemical manufacturing. But rising energy costs, especially natural gas, put them at a significant cost disadvantage. Location near major markets in Europe is an advantage but when cost cannot compete with imports the future is bleak.
This might be true of materials in Europe generally and maybe even for cars. Tariffs can protect these industries but will customers pay those higher prices? And where do they get the money? Jobs, jobs, jobs. Good paying jobs are essential!!!
Here are some reasons (some already given above):
- uncertain US business environment
- US trade policy
- amount/lack of trust in US institutions
- EUR appreciation versus USD
- Europe equity valuations relative to US
1 Like
Its dumb to move money from high innovation, high growth, low regulations, low tax to opposite in EU.
US will be higher innovation, higher growth, lower regulations, lower tax. Change and disruption is turbulent.
Capital WILL move to US. There is NO alternative.
The worldâs second-largest economic bloc has barely grown over the past several years as businesses held back investment and households tried to rebuild wealth lost due to high inflation, putting Europe on the back foot even before the latest escalation in trade tensionsâŚ
The 20 nations sharing the euro currency saw their economy expand by 0.4% in the first quarter, beating expectations for 0.2%, driven by quick growth in Spain, Eurostat said.
However, the underlying trend was significantly weaker as the data was distorted by a 3.2% expansion in Ireland driven largely by activity among big foreign companies based there for tax reasons.
DB2