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Residential real estate prices witnessed 2023 the largest drop since the beginning of systematic real estate price recording in Germany about 60 years ago. This applies to all residential segments–apartments, single-, and multi-family houses. This is shown by the latest update of the German Real Estate Index (Greix) with data for the 4th quarter, in which the price decline did not continue to the same extent. The Greix is a joint project of the local expert committees (Gutachterausschüsse), ECONtribute, and the Kiel Institute. The index is based on transaction datasets from the expert committees, which rely on notarial certified contracts. Currently covering 19 cities, all data is openly accessible at www.greix.de.

The amount of freight transported through the Red Sea has once again decreased in January. In December, it had plummeted by over half due to attacks by the Houthi rebels. Currently, over 80 percent fewer containers are passing through the sea route and the Suez Canal than would normally be expected. This also has consequences for German ports like Hamburg and Bremerhaven, where the number of incoming ships has decreased by 25 percent. This information is derived from the latest update of the Kiel Trade Indicator for January 2024. The algorithm analyzes real-time position data of container ships in 500 ports and 100 sea regions worldwide.

Rolf J. Langhammer, trade expert at the Kiel Institute for the World Economy (IfW Kiel), comments on the Hong Kong court decision to dissolve the real estate company Evergrande.

The latest update of the Kiel Trade Indicator for the month of December 2023 shows the consequences of the attacks on cargo ships in the Red Sea. The volume of containers transported there plummeted by more than half and is currently almost 70 percent below the volume that would usually be expected. As a result, freight costs and transportation time in goods traffic between East Asia and Europe have risen and imports and exports from Germany and the EU are in some cases significantly lower than in the previous month of November 2023 (price and seasonally adjusted).

Dr. Wan-Hsin Liu, expert on China, international trade and investment at the Kiel Institute for the World Economy, comments on the economic policy options for the EU and Germany in light of the upcoming presidential election in Taiwan:

An abrupt halt to trade with China would cause Germany's economy to shrink by 5 percent in the short run. The slump is comparable to that following the financial crisis or the COVID crisis. This is the result of a simulation study led by the Kiel Institute. In the medium to long term, the loss will stabilize at around 1.5 percent annually. A gradual, cautious reduction in trade relations would avoid the high initial costs.

According to the Kiel Institute's winter forecast, the German economy is only slowly regaining momentum and the downside risks have increased significantly. Economic output in Germany is likely to fall by 0.3 percent in the current year, slightly less than expected in the fall forecast (minus 0.5 percent). The outlook for subsequent years has become gloomier, primarily due to the upcoming budget consolidation. The economic consequences depend largely on the specifics of budget cuts and their macroeconomic impact, both being highly uncertain. Unemployment is likely to rise slightly next year, inflation will fall to below 2 percent and disposable incomes will increase significantly. An upturn in the global economy is still a long way off.

The dynamics of support to Ukraine have slowed. Newly committed aid has reached a new low between August to October 2023—an almost 90 percent drop compared to the same period in 2022. Ukraine now increasingly relies on a core group of donors such as the US, Germany, and the Nordic and Eastern European countries that continue to pledge and deliver both financial aid and important weaponry, such as F-16 fighter jets. The outlook is unclear, since the largest pending aid commitment—by the European Union—has not been finally approved, and aid by the US has been on the decline. These are results from the latest Ukraine Support Tracker update, which now covers commitments through October 31, 2023.

According to the latest update of the Kiel Trade Indicator, global trade declined in November compared to the previous month of October (price and seasonally adjusted). In line with the weak development, the volume of standard containers shipped has also fallen. German foreign trade in particular is following a sustained period of weakness. Shipping traffic in the Red Sea is well below the volume actually expected, which is primarily due to economic factors. The effects of the conflict in the Middle East are only likely to become apparent in the medium to long term.

Four young economists based in the United States and the United Kingdom received this year’s Excellence Awards in Global Economic Affairs of the Kiel Institute.

Economist Gita Gopinath was today awarded this year's Bernhard Harms Prize by the Kiel Institute for the World Economy. Moritz Schularick, President of the Kiel Institute, praised her “as one of the world's most influential scholars in the fields of international finance and international macroeconomics.” Gopinath is First Deputy Managing Director of the International Monetary Fund (IMF) and previously served as the Fund's Chief Economist. Before joining the IMF, she had a distinguished academic career.

Europe and Germany have to shift perspective: not the strength but the weakness of the Chinese economy will be a central challenge going forward.

In the third quarter of 2023, residential property prices in Germany have fallen, in some cases significantly. Compared to the second quarter of 2023, all housing segments have become cheaper, although there are strong regional differences and outliers. Among the major cities, prices are most stable in Cologne and Berlin. The number of property transactions has fallen significantly. This is shown by the latest update of the German Real Estate Index (GREIX), a project of ECONtribute and the Kiel Institute, which tracks the development of German real estate prices using the latest scientific methodology. All data for currently 18 German cities and their districts is freely available at www.greix.de.

After weaknesses in previous months, global trade showed a clear upward trend in October (compared to the month of September, price and seasonally adjusted). Such strong growth was last seen in March. The upturn is also being driven in particular by the member states of the European Union, where economic output has recently contracted slightly. The strong trade figures are therefore a positive sign for growth in the fourth quarter. China's trade, on the other hand, is following the downward pull of a subdued global economy.

Prof. Dr. Moritz Schularick, President of the Kiel Institute for the World Economy comments on today's interest rate decision by the European Central Bank (ECB):

Development aid is largely ineffective in reducing irregular migration. A new comprehensive study led by the Kiel Institute for the World Economy finds that aid causes only a brief, temporary reduction in asylum seeker numbers—in the most fragile countries there is none at all. Over time, aid leads to an increase in regular migration, which consists mainly of labor, student, and family migration.

Kiel Institute President Moritz Schularick comments on the Sveriges Riksbank Prize in Economic Sciences 2023 (Nobel Prize):

Moritz Schularick, President of the Kiel Institute for the World Economy, comments on the possible economic consequences of the terrorist attack in Israel at the weekend: