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The WTO has provided the international community with very large welfare gains, and bilateral trade agreements cannot replace its multinational system. The collapse of the WTO would therefore lead directly to a loss of prosperity worldwide. To prevent this, IfW President Felbermayr makes four concrete reform proposals.

The trade agreement concluded between the USA and Japan is not in conformity with current WTO law. Bilateral agreements between individual member countries are permitted, but only if they cover substantially all the trade. However, the US and Japan have only agreed to liberalize a very small part of their mutual tariff lines. This is the result of a recent analysis by the Kiel Institute for the World Economy.

Professor Gabriel Felbermayr, President of the Kiel Institue for the World Economy, comments on the outcome of the UK elections.

The downturn in the German economy is slowing down, but a noticeable recovery is not expected until 2021 at the earliest. In its most recent forecast, the Kiel Institute expects gross domestic product to grow by 0.5 percent (2019), 1.1 percent (2020) and 1.5 percent (2021). It is slightly raising its expectations by 0.1 percentage points in each case. Due to a high number of working days, the growth rate in 2020 is oversubscribed by 0.4 percentage points. In 2021, the government budget balance should be negative again for the first time.

A new EU project funded with 12m Euros will provide new insight into making ocean observation more efficient.

Analysis: Why Latin America is back in crisis mode after years of recovery.

The World Trade Organisation (WTO) has cleared US proposals of countervailing tariffs against European subsidies to Airbus. The US tariffs turn out to be relatively modest, but the US could raise them to up to 100 percent. According to researchers at the Kiel Institute, France, Germany, and Great Britain are the countries most affected by the tariffs that will come into force on Friday (October 18, 2019). The EU would be well advised not to impose countering tariffs but to engage in negotiations at the WTO. Otherwise the situation could escalate, creating GDP costs of 1 bn Euro per year in Germany alone.

The new EU Commission should now tackle asylum and immigration policy afresh. Migration researchers recommend that, to overcome the current deadlock, the Commission should untie the reform package for the Common European Asylum System and the EU should adopt those legislative files for which there is already a broad consensus among member states. In addition, the EU should significantly increase the funds in its long-term budget for asylum and migration and establish a monitoring mechanism to keep track of member states’ contributions to the common asylum and migration policies.

Interested participants can now register for the 2019 Forum on Globalization and Industrialization to be held on 19 November 2019 at the UNIDO HQ in Vienna, Austria.

Europeans want to protect refugees, but prefer policies that use limits and conditions, according to an analysis of the attitudes of 12,000 people across European countries towards asylum and refugee policies.

Kiel Institute President Gabriel Felbermayr comments on the Nobel Prize in Economics 2019.

Special Economic Zones (SEZs) are an increasingly popular instrument of trade and industrial policy, particularly in developing countries. The authors present the (socio-)economic effects of SEZs through an analysis of existing literature.

Germany’s leading economics research institutes have revised their economic forecast for Germany significantly downward. Whereas in the spring they still expected gross domestic product to grow by 0.8 percent in 2019, they now expect GDP growth to be only 0.5 percent. Reasons for the poor performance are the falling worldwide demand for capital goods – in the exporting of which the Germany economy is specialized – as well as political uncertainty and structural changes in the automotive industry. By contrast, monetary policy is shoring up macroeconomic expansion. For the coming year, the economic researchers have also reduced their forecast of GDP growth to 1.1 percent, having predicted 1.8 percent in the spring.

Kiel Focus by Juliane Stein-Zalai: The current French G7 Presidency has promised to turn gender equality into a global matter. To achieve this goal, the G7 states need to take bold policy measures, increase financial resources, and work more closely with the G20, says Juliane Stein-Zalai.

The German economy is facing one of the weakest years since the financial crisis. The economic researchers at the Kiel Institute expect gross domestic product to grow by only 0.4 percent in 2019, 0.2 percentage points less than previously forecasted. Such weak figures were last seen in 2013 in the wake of the euro debt crisis. However, the economy should pick up again in the middle of next year. In 2021, public budget balances enter deficit territory.

More than 25 percent of the aid money given by rich countries is not transferred to developing countries. Moreover, the increase of development aid in recent years is mostly attributable to higher spending on refugees within donor countries, according to a study of development experts. These findings are at odds with policy makers’ intentions of increasing development aid as a means to curb irregular migration.

The recent tariff increases in the current trade war between the USA and China is also making goods in third countries more expensive. The US trading partners Canada and Mexico, but also the EU, are particularly affected. A new study shows how significant these indirect effects of tariffs are due to the connectedness of countries via global supply chains.

Statement by Klaus-Jürgen Gern on recent developments in foreign exchange markets and the reaction by the US administration.