The powerhouse of Europe has lost some of its drive as the euro crisis and world downturn took their toll last year.
German economic growth slowed over the year as the sovereign debt crisis and weaker global growth damped exports and company investment.
GDP increased just 0.7 per cent from 2011, when it gained 3 per cent, the Federal Statistics Office in Wiesbaden said yesterday. Economists forecast growth of 0.8 per cent, according to the median of 28 estimates in a Bloomberg News survey. Germany's budget surplus amounted to 0.1 per cent of GDP.
The euro zone, Germany's largest export market, fell into recession last year as countries from Greece to Spain cut spending to rein in deficits and weaker growth in the United States and China curbed global trade. The latest data suggest confidence is improving, and Mario Draghi, the European Central Bank president, last week expressed optimism that the 17-nation euro economy will return to health later this year.
"Considering the environment in which the German economy had to operate, it has done remarkably well," said Andreas Scheuerle, an economist at Dekabank in Frankfurt. "2012 was a year of caution and uncertainty. It looks like that's subsiding now. If it does, we're in for a considerable economic recovery later this year."
Company investment in plant and machinery dropped 4.4 per cent last year, the statistics office said.
Export growth slowed to 4.1 per cent from 7.8 per cent in 2011.
The ECB kept interest rates unchanged last week. While risks to the economic outlook remain skewed to the downside, Mr Draghi said signs for "positive contagion" are emerging that could help foster a "gradual recovery" in the euro zone later in the year.
German business confidence rose for a second month in December, unemployment held close to a two-decade low and industrial production and retail sales increased in November. Financial markets also recovered at the end of last year, with the benchmark DAX index gaining 11.5 per cent since mid-November.
Continental, Europe's second-largest maker of car parts, said on Monday sales and profitability growth may slow this year as demand within the region falters. The company has nevertheless mitigated the effects of the debt crisis by following Volkswagen and other German car makers into growing markets.
"Germany is a very competitive economy and in a position to exploit improvements in the US and China," said Anatoli Annenkov, an economist at Société Générale in London. "Growth won't be strong at the beginning of the year but it will be decent."
Elsewhere in Europe, David Cameron, the UK prime minister, yesterday announced he would set out how he plans to renegotiate Britain's membership of the European Union, and then persuade voters to back his position in a referendum, in a speech in the Netherlands on Friday.
Mr Cameron wants Britain to reclaim unspecified powers from the EU, and he signalled his support yesterday for putting the result to a plebiscite after the 2015 general election, with the government arguing to stay in the EU. He dismissed as a "false choice" calls from members of his Conservative Party for an early vote on leaving the 27-nation bloc.
"The beating heart of Britain is, we know we need to be, in Europe because we are a trading nation," Mr Cameron told the UK broadcaster ITV.
"But we're not happy with every aspect at the moment - there's too much interference.
"People want that to be fixed, they want more of a say.
"We shouldn't be frightened to involve the British people in that," he said.
* with Bloomberg News
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
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WITHIN%20SAND
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Where to apply
Applicants should send their completed applications - CV, covering letter, sample(s) of your work, letter of recommendation - to Nick March, Assistant Editor in Chief at The National and UAE programme administrator for the Rosalynn Carter Fellowships for Mental Health Journalism, by 5pm on April 30, 2020.
Please send applications to nmarch@thenational.ae and please mark the subject line as “Rosalynn Carter Fellowship for Mental Health Journalism (UAE programme application)”.
The local advisory board will consider all applications and will interview a short list of candidates in Abu Dhabi in June 2020. Successful candidates will be informed before July 30, 2020.