Friday, March 15, 2013

The strength of the German economy as described by Spiegel

German newspapers in general manufacture a pretty positive view show their reality of a strong strong economy in our country. To that end, they use experts like professors and their findings. Spiegel found two institutes with a pretty differing view on the future of the German economy. Lets see which one and which numbers get more space. The title translates "German economy: experts predict solid growth" (all translations by me) The first sentences are:

Die Aussichten für Deutschland verbessern sich: Führende Ökonomen haben ihre Prognosen nach oben geschraubt. Um bis zu 2,4 Prozent soll die Wirtschaft im kommenden Jahr wachsen.
The outlook for Germany is improving: leading economists have corrected their predictions upwards. The Economy is said to improve up to 2.4 % in the next year.
2.4 % sounds pretty good. But there is of course a catch. They are talking about 2014. These are the numbers of the IWH who predict 1.3 % GdP growth in 2013 which is mentioned in the article. They also use data of ifw Kiel. Here they high-light the increase from the older prediction for 2013 (0.6 % instead of 0.3 %). Yeah thats still quite an abysmal prediction, but you just need to know how to sell it. 0.6 % so much better than 0.3 %. Let's all chant: "GER MA NY; GER MA MY; GER MA NY"

Then they try really REALLY hard to find some positive economic numbers. They talk about exports in the last Quarter of 2012. They only use positive numbers, which are correct but misleading. The forth quarter exports were down 2.4 % seasonally adjusted compared to QIII. Yeah great, that we had better numbers that QIV 2011. Still exports actually tanked.

Here are a few more numbers from the "Statistisches Bundesamt":

New Orders:01-2013 down 1.5 % compared to last year, down 1.9 % SA compared to last month
Production: 01-2013 unchanged compared to both last month (SA) and last year. But down 1,3 % SA compared to last year(my calculation)
Real GDP: down 0.6 % in QIV

SA New orders and Production in Germany (Y-Axis starts at 70 % !)
So the picture is painting is quite different from the real one above graphs. Especially new orders don't look good at all and are the leading indicator for production. How the IWH came to the conclusion that growth this year will be 1.3 % is also currently beyond me. There is a clear downwards trend in manufactoring new orders. Foreign new orders have fallen from from a maximum of 110.7 % (100 %=2010) in November 2010 to 102,4 % in January 2013. So I just do not understand why exports should grow by 2.8 %. But I am just an engineer what do I know about the world dominating, utopia generating concept of the "return of confidence" (Rückkehr des Vertrauens [just to show my confidence in confidence]).

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