No clear signals are in sight

While the US economy still looks in robust shape, the weakness in the euro area is broadening. In this context, Germany is mainly lagging behind because of (definitely solvable) structural problems.

Perspectives edition 2023/8

Clear & concise

  • The US economy is looking in robust shape, whereas the weakness in the euro area is broadening
  • Global GDP growth prospects for 2024 are deteriorating further
  • Inflation is set to continue trending downwards in spite of resurgent oil prices
  • Fed and ECB rates are plateauing, but further tightening steps remain a possibility
  • A high degree of volatility should continue to prevail on bond markets

Video: An espresso with Jürgen Michels


As expected, neither the Federal Reserve nor the ECB received clear signals over the course of the summer recess that the key-rate hikes they have implemented to date are sufficient to restore price stability. This fog is unlikely to clear very much over the coming months either. Especially in Europe, however, the braking effects of policy-rate increases on economic activity are becoming ever more apparent, which is an argument against further tightening steps. Our baseline scenario therefore continues to assume that both the Fed and the ECB have reached the interest-rate plateau. In such an environment, bond markets should remain volatile, with yields declining only gradually.

Where the downtrend in manufacturing industry has persisted worldwide over the summer, developments in the services domain are looking heterogeneous. Service-providers are continuing to make a good showing in the United States, which has prompted us to revise our 2023 GDP projection for the USA upwards from 1.4% to 2.1%; still factored in is a growth slowdown at the outset of 2024. In the euro area, sentiment in the services sector is...

Read more No clear signals are in sight (2023/9/13)