Media Releases

Ukraine is facing uncertain times regarding continued support from its Western allies. A second term for Donald Trump as US President or leaning on new lending schemes such as the proposed Russian frozen asset or NATO contributions as a replacement for European aid could severely undermine Ukraine. Meanwhile, aid increased during the summer months compared to the spring, driven primarily by funds aimed at stabilizing Ukraine’s economy. This is shown in the latest update of the Ukraine Support Tracker, which tracks aid through August 2024.

Gender inequality in trading partner countries has a negative impact on women entrepreneurs, even if they are from well-developed countries. Firm-level data from Denmark show that new businesses founded by women trade less with countries with higher gender inequality than similar businesses founded by men. This, thus, makes it more difficult for women entrepreneurs to gain new market share, which can hamper the growth performance of their businesses. These are some of the findings of a new study by RETHINK-GSC, an EU-funded research project led by the Kiel Institute.

The Joint Economic Forecast Project Group forecasts a 0.1% decline in Germany's gross domestic product in 2024. Looking further ahead, the institutes expect a weak recovery with growth of 0.8% (2025) and 1.3% (2026). Compared to the spring forecast, this represents a downward revision of 0.2 (2024) and 0.6 (2025) percentage points. “In addition to the economic downturn, the German economy is also being weighed down by structural change,” says Dr. Geraldine Dany-Knedlik, head of Forecasting and Economic Policy at the German Institute for Economic Research (DIW Berlin). “Decarbonization, digitalization, and demographic change – alongside stronger competition with companies from China – have triggered structural adjustment processes that are dampening the long-term growth prospects of the German economy.”

After decades of military downsizing, German military spending is woefully inadequate to meet the new strategic challenge posed by Russia—as both a new report by the Kiel Institute for the World Economy and the new Kiel Military Procurement Tracker show. In combination with a cumbersome national procurement system and depending on weapon systems it would take Germany as much as a century to bring its military inventory up to the level of 20 years ago. In contrast, Russia is radically increasing its capacity to produce armaments, including advanced systems, and is now in a position to produce as many weapons in six months as all of Germany’s armed forces currently field.

German economic output is likely to shrink again in 2024, after it has already fallen in the previous year. This is according to the Kiel Institute's latest autumn forecast. Positive signals in the middle of the year have not been confirmed, which is why the Kiel Institute is revising its expectations for this year and the coming year significantly downwards. GDP is likely to fall by 0.1 percent in 2024 (summer forecast: +0.2 percent). For 2025 growth expectations are down from 1.1 percent to 0.5 percent. The unemployment rate is likely to rise to up to 6.1 percent, inflation is presumed to grad-ually ease to 2 percent.

Economist Hélène Rey will be awarded this year's Bernhard Harms Prize by the Kiel Institute for the World Economy. She is one of the world's most influential scholars on international macroeconomics and finance with special emphasis on financial stability, international capital flows, exchange rates, and the international monetary system. Rey is the Lord Bagri Professor of Economics at London Business School. The 10,000 Euro Bernhard Harms Prize, one of Europe's leading awards in the field of international economics, has been awarded by the Kiel Institute for the World Economy since 1964.

For the first time in around two years, German real estate prices have been rising across the board in the second quarter of 2024. All market segments—apartments, single-family homes, and multi-family homes—were increasing in value compared to the previous quarter Q1 2024. Price increases were also outperforming current inflation rates.

The motivation behind the West's and China's granting of loans to African countries differs considerably. Western countries are more likely to lend to resource-poor and highly indebted African countries than China. China's lending to Africa is more driven by its economic interests, lending to countries with richer resources, lower risk of default, and higher willingness to pay for loans. These conflicting interests jeopardize much-needed debt relief for African countries, according to a new study by the Kiel Institute that examines lenders’ motives for lending to African countries.

Starting on July 4, 2024, the European Union will impose provisional countervailing duties of on average 21 percent on battery electric vehicles (BEVs) imported from China. This decision follows an investigation that found evidence of WTO-incompatible subsidies for Chinese BEVs. The EU is now the last major market to establish new trade barriers against Chinese BEVs. While imports of Chinese vehicles may significantly decrease, the long-term impact on electric vehicle prices is expected to be minimal. It could be particularly advantageous for the EU to now adjust its tariff policies towards other WTO members as well.

The Kiel Institute for the World Economy (IfW Kiel) and its partners, the state capital Kiel and the Schleswig-Holstein Chamber of Commerce and Industry, awarded the Global Economy Prize for the 19th time today at the Haus der Wirtschaft in Kiel. This year's award went exclusively to women.

According to the Kiel Institute's summer forecast, Germany is experiencing a moderate economic recovery. Economic output is expected to grow by 0.2 percent in the current year (spring forecast: 0.1 percent). The upturn will be driven primarily by a recovery in exports and consumption. However, there are no signs of strong economic momentum. The Kiel Institute expects growth of 1.1 percent in 2025 (spring forecast: 1.2 percent). The inflation rate is expected to level off at around 2 percent and the labor market will remain largely robust.

A long-awaited Ukraine supplemental appropriations bill for Ukraine was finally signed into law on April 24, after months of deliberation. At USD 31.5 billion, the funds destined for Ukraine are only about half of the reported USD 61 billion and are significantly lower than the USD 39.5 billion granted in December 2022. The other half is mostly Department of Defense funding for procurement, operations, and maintenance and is not directly attributable as aid for Ukraine. There is still a large discrepancy between air defense equipment provided to Ukraine and the stocks held by the donor states. This is shown in the latest update of the Ukraine Support Tracker, which tracks aid to Ukraine through April 30, 2024.

Should the EU impose a 20 percent tariff on imports of Chinese electric cars, as speculated, it would have a noticeable impact on bilateral trade and production in Europe. The volume of imported electric cars from China would fall by 25 percent. Converted to the almost 500,000 vehicles imported in 2023, this corresponds to an estimated 125,000 units worth almost 4 billion US dollars. The decline would largely be offset by an increase in production within the EU and a lower volume of EV exports, which would likely mean noticeably higher prices for end consumers. This is shown by simulations by the Kiel Institute.

Although China's importance for the EU's foreign trade is high, it has declined in recent years. The reason for this is that the EU has intensified trade with other countries. In a recent analysis, the Kiel Institute recommends the EU to continue on this course and conclude free trade agreements with countries such as Australia and the Mercosur states. In this way, it could reduce its dependence on China in the face of geopolitical tensions. China currently dominates as a supplier of certain electronic products and raw materials to the EU. If trade were to be disrupted, this would result in high costs in the short and medium term.

The winners of the Global Economy Prize 2024 have been officially named. This year, the Kiel Institute for the World Economy, together with its partners, the land capital Kiel and the Schleswig-Holstein Chamber of Commerce and Industry, is awarding the Global Economy Prize for the 19th time. The Global Economy Prize is intended to provide an impetus to overcome the major global economic challenges by transcending borders.

The tariffs recently imposed by US President Joe Biden on imports from China, particularly electric cars, are unlikely to have any negative trade consequences for Europe. In particular, the number of electric cars imported by the US from China is so small, only 12,000 per year, that a detour to other target markets is practically unnoticeable.

German real estate prices developed unevenly in the first quarter of 2024. The trend towards stabilization from the previous quarter persists, with the pace of price decline slowing down. However, there are major differences depending on the region and residential segment.

The purchase prices for apartments in German cities vary considerably between districts. City centers are particularly expensive, where the price per square meter can be up to twice as high as in outer or unpopular districts. Conversely, the wide price ranges mean that practically all major German cities still offer relatively favorable locations for buyers. The exception is Munich, where the cheapest quarter is more expensive than the most expensive quarter of all other major cities. This is shown by the latest evaluation of the German Real Estate Index (GREIX) on property prices at district level in 2023.

New European aid to Ukraine has not shown an uptick in recent months, despite the fact that US aid has come to a complete halt. In January and February 2024, European countries allocated a total of about EUR 6 billion in aid to Ukraine, almost all of it for the military. This is shown in the latest update of the Ukraine Support Tracker, which tracks aid commitments through February 29, 2024. The European aid in recent months is nowhere near enough to fill the gap left by the lack of US assistance, particularly in the area of ammunition and artillery shells. The new US aid package which passed congress last weekend is therefore crucial, but not yet included in the figures.

A new study by the Kiel Institute indicates that Beijing heavily subsidizes its domestic industries, particularly in sectors such as green technologies like electric mobility or wind power. Estimates suggest that China's overall subsidies range between three to nine times that of other OECD countries such as the USA or Germany. According to the analysis of new data, one of the major beneficiaries is the electric car manufacturer BYD. This reflects BYD's significant expansion in both technological and production capacities, as well as its increasing competitiveness.

Public investments in the development of lagging-behind regions reduce support for right-wing populist parties. This is shown by recent research results from the Kiel Institute. The influence of EU Regional Policy on the outcomes of European elections has been investigated. In funded regions, the vote share of right-wing populist parties fell by 15 to 20 percent, on average, that is 2 to 3 percentage points. At the same time, trust in democratic institutions increased, while dissatisfaction with the European Union (EU) decreased. Support for left-wing populist parties was not affected.

According to Germany’s five leading economic research institutes, the country’s economy shows cyclical and structural weaknesses. In their spring report, they revised their GDP forecast for the current year significantly downward to 0.1 percent. In the recent fall report, the figure was still 1.3 percent. Expectations for the coming year are almost unchanged at 1.4 percent (previously 1.5 percent). However, the level of economic activity will then be over 30 billion euros lower due to the current weak phase.

The conflict in the Middle East is changing international trade routes at sea. The number of container ships passing through the Red Sea and the Suez Canal fell again in February compared to January. At the same time, the number of ships around the Cape of Good Hope off Africa tripled. However, no greater negative consequences are to be expected for the global economy as a whole or for the German economy in particular, as both freight rates to Europe and the volume of goods arriving in the North Sea are stabilizing. This is according to the latest update of the Kiel Trade Indicator. The algorithm evaluates the global position data of container ships in real time.

According to the Kiel Institutes latest forecast, Germany's path out of the economic slump takes more time, with a moderate recovery setting in later this year. Economic output is likely to shrink in the winter half-year and will barely more than stagnate in 2024 with GDP increasing by 0.1 percent only. The Kiel Institute has thus markedly revised its expectations downwards by 0.8 percentage points. Reasons: Private consumption and exports are recovering later and less dynamically, and corporate investment spending is also weak. Next year’s GDP is expected to grow by 1.2 percent. Inflation is expected to fall to below 2 percent and the fiscal deficit to below 0.8 percent.