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Germany - Political uncertainty keeps weighing on economy
- Macro economy
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The economy is stabilizing but remains fragile, with inflation above target. Some progress on pension reforms, but internal tensions persist. Rising political risks and uncertainty due to voter dissatisfaction.
Global Monthly - Teflon economy shaking off another shock
- Macro economy
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The global economy remains resilient in the face of persistent shocks. The AI boom, defence spending and the energy transition ‘capex troika’ are likely to continue supporting growth going forward. Still, AI bubble risk, and sovereign debt dynamics remain a worry.
Germany - Weaker outlook amid rising risks and political uncertainty
- Macro economy
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Q1 GDP rose 0.3% q/q in Q1. Leading indicators signal ongoing but slowing momentum. We have downgraded our forecast from 0.8% to 0.7% this year and from 1.2% to 1% next year. Increasing inflation and softening labour market conditions will affect purchasing power. Limited reform progress and growing political fragmentation add uncertainty to the economic outlook.
Germany - Cautious recovery pressured by geopolitical uncertainty
- Macro economy
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A tentative recovery remains vulnerable as energy and geopolitical uncertainty weigh on the outlook. The sharp rise in factory orders at the end of 2025 has yet to translate into higher industrial production. Still, the allocation of special defence, infrastructure, and climate funds is gathering momentum.
Global Monthly - It takes three to TACO
- Macro economy
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With the Iran conflict ongoing and the chance of a ceasefire uncertain, we update our base case for growth, inflation and interest rates. We assume severe energy disruptions last until the end of May, and this could happen even if the conflict ends relatively soon. The inflation impact of the energy shock continues to outweigh the growth hit, and central bank responses are therefore likely to tilt hawkish. We now expect the ECB to hike rates twice in Q2, and the Fed to delay cuts to Q4. Both central banks are expected to cut rates in 2027.
Global Monthly - Geopolitics bad, macro good
- Macro economy
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While the risks have certainly not gone away, economic data has been generally firming, while near term positive impulses are getting stronger. Higher AI capex spending looks to be bigger than expected, fiscal stimulus is ramping up and financial conditions remain easy. So far geopolitics has been the dog, which barks very loudly, but does not bite. That cannot be taken for granted with Iran the latest flashpoint. SCOTUS decision to scrap IEEPA tariffs may not change too much, not least because fresh tariffs have largely replaced the old ones. There is an increasing chance that the global economy may run hot in the near term but also of a future hangover further down the line.
Germany - An important year for the country
- Macro economy
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The German economy grew by 0.2% q/q in Q4, landing the annual average for 2025 at 0.3%. We expect government spending alongside other factors to drive an increase in growth to 0.9% in 2026. Recent news on delays to government investment and tariffs introduce downside risks to the forecast.
Global Monthly - Orange is the new Green
- Macro economy
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Geopolitical risk is increasingly dominating the outlook. The US-EU dispute over Greenland threatens a new tariff war – or worse. Over the next month, we will see just how far Trump is prepared to go to obtain Greenland, and whether Europe can stand its ground. We refrain from changing our base case given the fluidity of events, but uncertainty is clearly back with a vengeance, and the outlook less benign. Spotlight: We present a framework to analyse the main channels through which geopolitical risk impacts the economy.
Global Outlook 2026 - The shifting world order
- Macro economy
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The transition from one world order to another is in full swing, but it is still unclear how that new world order will look. The advent of AI, China’s rise, and the US’s relative decline offer challenges but also opportunities. The trade war weapon du jour has shifted from tariffs to chokepoints, creating new challenges for governments and manufacturers. Fiscal troubles in France and the UK are likely to remain a worry. Global growth has been remarkably resilient given the headwinds. We expect that resilience to continue in 2026, albeit with considerable risks.
Sovereignty increases EU regulatory burden
- Macro economy
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Trade between European member states is less intensive than trade between the 50 American states. Consequently, the benefits of scale and specialization remain underutilized, resulting in lower productivity growth compared to the US. One reason for the disparity in trade intensity is the complex regulations that hinder the internal market. The complexity of European regulations is not primarily due to the inferiority of individual member states' regulations compared to those in the US, but rather the lack of harmonization among the member states. Simplifying rules, as the European Commission currently aims to do, does not necessarily resolve this issue. A truly unified, common market with low transaction costs becomes feasible when member states can no longer easily negotiate exemptions or establish additional rules. Therefore, member states will need to relinquish some sovereignty. Furthermore, new regulations should be consistently evaluated for effectiveness (do the rules achieve the intended outcomes?), efficiency (are these outcomes achieved at the lowest possible cost?), consistency (do the rules align with policies in other areas?), and enforceability (can compliance be effectively monitored?). This evaluation task was previously assigned to the European Commission. However, as the Commission's role has become more political, and compromises are often required to strike deals, it is less able to perform this task effectively. Consequently, this responsibility should be assigned to an independent body.
