6 questions to Dr. Holger Schmieding, Chief Economist, Berenberg Bank

Yes, there is. There are increasing signs that global trade in manufactured goods will pick up again slightly this year after a setback last year. With slightly better sales prospects, the painful inventory correction in the manufacturing sector in the western world will come to an end. Instead of companies producing less than they sell and continually reducing their orders with suppliers in order to clear stocks, they will produce a little more again. This will also help German industry in particular. In addition, consumers’ purchasing power will increase thanks to higher wages as inflation falls. Private consumption can slowly pick up from spring onwards.

Yes, at least for the time being inflation is under control. On average, households no longer have to pay quite as much for electricity and gas as they did a year ago. Prices are falling for some foodstuffs, and price pressure has also eased for many goods. Inflation may fall below 2% in the summer. However, this will not be permanent. If the economy improves and wage pressure continues as a result of an increasing labour shortage, inflation could climb back to around 2.5% in 2026.

At least three steps of 25 basis points each from June 2024, followed by three further steps in the first half of 2025, until the deposit rate reaches 2.5% instead of the current 4%. There is a good chance that the ECB will even cut interest rates four times this year. However, I think it is likely that the ECB will then have to raise its deposit rate back to the roughly neutral level of 3% in 2026 if inflation picks up again.

House prices will initially continue to fall before reaching their lowest point in around autumn 2024. Residential construction will also continue to decline until the end of 2024. However, rising incomes, a less restrictive monetary policy and an increasing shortage of housing will allow house prices to rise again from 2025. Residential construction may also increase again from next year. By contrast, the outlook for office property is rather mixed, even in the medium term.

The curve is normalising somewhat. At the short end, the ECB is ensuring lower yields, while at the long end, yields may even rise slightly if the economy improves, governments in the US and Europe have high financing requirements and there is the prospect of slightly higher inflation again in 2026.

At 2.6% at the end of 2024 and 2.8% at the end of 2025.