Wirtschaftspolitik in Zeiten des Booms

Transcription

1 Schleswig-Holsteinische Universitäts-Gesellschaft Trappenkamp, 28. Mai 218 Wirtschaftspolitik in Zeiten des Booms Prof. Dr. Stefan Kooths Prognosezentrum 1

2 Institut für Weltwirtschaft (gegr. 1914) Prognosezentrum 2

3 Wachstum und Konjunktur Produktion Auslastung (Abschwung/Kontraktion) Auslastung (Aufschwung/Expansion) tatsächliche Produktion Abkühlung Rezession Erholung Boom Überauslastung Unterauslastung Zeit 3

4 Diagnosis and forecast 4

5 forecast Drifting towards overheating Production and potential output Output gap (rhs) GDP Potential output Bn. Euro Annual data; GDP, Potential output: price adjusted (chained volumes, reference year 21) Stretched upswing (5+ years) continues Weak cyclical pattern ( chewing gum cycle ) Immigration supports labor force and potential growth (refugees: large time lag)» 216: » 217: + 5.» 218: + 4.» 219: + 3. Capacity utilization in most industries clearly above normal levels 5

6 Upward capacity utilization trend Capacity utilization in manufacturing Order-capacity-index (rhs) Pre-crisis peak Capacity utilization I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV Quarterly data, seasonally adjusted; Capacity utilization: axes cross at normal capacity utilization level Manufacturing» 5-years upward trend, above normal since three years» order inflow strongly exceeds capacities Construction» Historically high levels, operating at capacity limits Services» Lack of demand (ifo) at lowest level since 25 Elastic labor market 6

7 218 starts with strong cyclical momentum Gross domestic product qoq-change (rhs) level = 1 1,2 1,,8 115,6,4,2 11, -,2 -,4 1,7 1,9 2,2 2,5 2,3 15 -,6 I II III IV I II III IV I II III IV I II III IV I II III IV Quarterly data, price, seasonally and calendar adjusted, qoq -change. Overall shiny business climate (ifo)» Situation still near all-time high (June 217)» Expectations above average, but declining 5 months in a row Order inflow» Accelerating in 217, some correction in January» Beyond pre-crisis peak Industrial production» Upward trending» Strong acceleration in 217» BUT: Exogenous dampening in Q1, upcoming revision for IfW forecast 217: Dampening working-day effect (.3 ppt) 218 starting with policy headwinds (trade conflicts, Iran, Brexit, Italy) 7

8 Broad-based expansion Expenditure-side components to GDP-growth Consumption Gross fixed capital formation External trade Inventories 4 age pts Annual data; price- and import-adjusted, Lundberg components. Foreign trade NOT neutral» Favorable external environment» Induced imports Investment activity» Financing conditions» Increase in capacity» Dwellings Consumption only slightly weaker» Private: Fading out oil-price effect» Public: Fading impulse from refugee costs 8

9 Exports back on track Exports qoq-change (rhs) = 1 level 4 Stronger order inflow Foreign markets 145 3» Less uncertainty» Brighter business climate Export markets 125 1» 217: + 3. %» 218: % 115» 219: % 15 5,2 2,6 4,7 6,2 4,8-1 I II III IV I II III IV I II III IV I II III IV I II III IV Quarterly data, price, seasonally and calendar adjusted, qoq -change. Risks» EU environment (Brexit, Italy)» Protectionist spirals 9

10 Transatlantic economic ties: Beyond the trade-centered debate Fig. 1: Transatlantic trade links Fig. 2: Transatlantic direct investment positions EU-27 UK EU-27 UK from EU to U.S. from U.S. to EU from EU to U.S. from U.S. to EU Data for 215; Exports: goods and services; Share of total exports; EU-27: EU excl. UK, in percent. Data for 211; Share of total outward foreign direct investment positions; EU-27: EU excl. UK, in percent. 1

11 Transatlantic economic ties: FDI as (some) protection against protectionism Bilateral trade balance» EU-surplus: 115 bn. Euro» Germany: 49 bn. Euro Export shares» From EU to U.S.: 16 percent» From U.S. to EU: 11 percent FDI positions» From EU to U.S.: 32 percent» From U.S. to EU: 5 percent Fig. 3: Importance of the EU Market for the U.S. Sales of U.S. MOFAs U.S. exports 2 Bn. US-$ 1.839, , , ,7 United Kingdom EU-27 Data for 214; EU-27: EU excl. UK. 11

12 Construction activity is booming Order stocks and capacity utilization in construction industry capacity utilization (rhs) Buildings Dwellings 21=1 Total Underground I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV Quarterly data. Capacity utilization: seasonally adjusted (218-Q1: Jan./Feb.; Order stocks: price, seasonally and w orking-day adjusted Capacity utilization» Record high level» Long-term average: 66 percent Order books piling up» Two-digit growth rates two years in a row (now broad based)» Approaching post-unification peak of mid-199s Price pressure» Value added: Strong upward pressure since 212» Stock transactions (vdp) 215: + 5. % 216: % 217: % 12

13 Strong further increase in constructions Constructions qoq-change (rhs) = 1 level 6 Dwellings as key driver» Extremely low financing cost 13 4» Dynamic labor market Pro-cyclical public investment spending Capacity limits as forecasting risk ,4 2,7 2,6 1,6 3,7 I II III IV I II III IV I II III IV I II III IV I II III IV Quarterly data, price, seasonally and calendar adjusted, qoq -change. 13

14 Comeback of M&E investment spending M&E Investments qoq-change (rhs) level = ,9 2,2 4, 5,7 4,6 1 I II III IV I II III IV I II III IV I II III IV I II III IV Already above pre-crisis level Favorable global environment Near record high business climate in M&E industries High and increasing capacity utilization Extremely low financing cost Quarterly data, price, seasonally and calendar adjusted, qoq -change. 14

15 but less pronounced cyclical pattern Investment cycles Output gap (rhs) GFCF Machinery and equipment Lack of skilled labor Demographic outlook Higher plasticity (software replaces hardware) Annual data. GFCF, machinery and equipment: volumes, change on previous year; Output gap: in percent of potential output. 15

16 Labor market increasingly tighter Employment qoq-change (rhs) Mn. 46 level Employment» 217: + 652, 45 2» 218: + 624,» 219: + 522, I II III IV I II III IV I II III IV I II III IV I II III IV Quarterly dataseasonally adjusted, qoq-change. Effective wages (hourly)» 217: %» 218: %» 219: % Unemployment rate» 217: 5.7 % [3.6 %]» 218: 5.2 % [3.3 %]» 219: 4.8 % [3. %] BA ILO 16

17 Fiscal policy without ambitions Structural budget balance Structural budget balance One-off effects Business cycle Budget balance 6 Bn. Euro Structural budget balance shrinks pro-cyclically Black zero leaves federal government with room for maneuver New government» No significant impact in 218» Fiscal package is end-loaded (221) Debt-to-GDP below 6 % in 219 Source: Europäische Kommission, AMECO; own calculations. 17

18 GDP: Don t be afraid of interim governments 18

19 forecast Medium-term: Leaving the boom behind Production and potential output Output gap (rhs) GDP Potential output Bn. Euro Annual data; GDP, Potential output: price adjusted (chained volumes, reference year 21) Temporary potential growth push (demographics) contrast to medium-term outlook Immigration/increasing labor market participation» Still compensating aging» but fading out in the medium-term New decade: Cyclical cooling meets weaker potential growth 19

20 Risk and policy assessment 2

21 Myth of eternal booms Booms don t die of old age, they are murdered by policy makers. Really? 21

22 Stability risks Endogenous distortions» Unsustainable business models» Durable goods cycles» Easygoing policy making Ultra-expansionary monetary policy» Distortion of relative prices production structures Capital stock Exchange rate» Financial stability Inadequate risk premia ( insolvency slack, hampered structural change) Overstretched maturity transformation Overestimating potential output» Data edge problem» Demographic interim high, future of refugees 22

23 Inadequate policy repsonse Pro-cyclical fiscal stance feeds into overheating Expanding the welfare state» Ignoring demographics» Aggravating inter-generational conflicts Redistribution debate» Higher minimum levels» instead of interlocking social security and market mechanisms Gulliver syndrome» Reduces flexibility» Makes next downturn even more painful 23

24 Minimum wage, equal pay, rent brake, gender quota, full-time/part-time guarantees 24

25 Feedback welcome! Prof. Dr. Stefan Kooths Head of Forecasting Center T (Kiel) T (Berlin)