The German economy ranks as the biggest economy in Europe. The GDP growth rate was last measured at 0.8%, with a surprisingly low unemployment rate of just 3.6%, and an inflation rate of 1.8%. There is currently a 0% interest rate in Germany, with a Debt/GDP ratio of 68.3%. According to industry analysts at the IFO, the economy will grow at a rate of 2.6% in 2018. The economic upswing currently taking place in Germany is helping to stabilize the Eurozone during a difficult Brexit process.
The DAX (Deutsche Boerse) is trading at around 13,100 heading into the New Year, with a 52-week low of 11,191.64 and a 52-week high of 13,525.56. Between December 2016 and December 2017, the DAX 30 had an approximate return of 16.83%, with a year to date return of around 14.35%. These statistics are testament to the robust performance of the German economy, and the blue-chip stocks that comprise its indices.
Which Stocks Have Been the Best Performers in the DAX?
Chief strategists from Wilkins Finance are strongly bullish on German stocks, particularly the following lucky 13 selections (figures are approximate increases over 1 year):
- SAP – up 19.03%
- RWE – up 75.21%
- EON – up 49.39%
- Adidas – up 21.28%
- Allianz – up 27.41%
- Vonovia – up 43.48%
- Beiersdorf – up 28.13%
- Deutsche Post – up 31.97%
- Continental – up 22.95%
- Volkswagen – up 34.32%
- Lufthansa – up 139.22%
- Commerzbank – up 63.67%
- Deutsche Borse – up 32.97%
For the year to date, the strongest performing stock on the DAX 30 is a Lufthansa which has gained around €17.40 over the past 1 year, as it hovers around the €30 mark for the stock. The IFO previously forecast that the German economy would grow at a rate of 2% for 2018, but this has been upgraded. The German economy is an important power player in the global economy. It forms the bedrock of the European Union coalition, and is central to the negotiations process between the UK and the EU vis-à-vis the Brexit.
Is Angela Merkel a Factor in German Economic Performance?
Currently, German Chancellor Angela Merkel is struggling to maintain a coalition to rule Germany. The recently held federal election on September 24, 2017 had a high voter turnout of 46,976,341 people (76.2% of voters). Angela Merkel has been leading the CDU/CSU party since 10 April 2000. In the recent election her party lost 65 seats. That -8.6% swing has hurt her party’s prospects of running the country. The SPD now holds 153 seats, or 20.5% of the vote, while the AfD now holds 12.6% of the votes, or 94 seats.
In 2011, the German GDP growth rate was 3.7%, and this current forecast will greatly benefit the German economy. At the time of the global financial crisis, European governments were adopting broad quantitative easing measures. Widespread expenditure in Germany has helped to reverse economic losses in the country. Leading analysts such as Clemens Fuest – the head of the IFO to be bullish on the German economy. He believes that strong headwinds will continue well into the New Year. The strongest components of the German economy include trade, construction and manufacturing.
German Unemployment Figures Plunging despite Influx of Refugees
The German PMI index (Purchasing Managers Index) indicated that manufacturing is now at its best level in over 20 years. The political shenanigans going on in Germany and elsewhere have had a negligible impact on manufacturing activity in the European economic powerhouse. Demand remains robust domestically and internationally. An equally important consideration for the German economy is the level of overall employment.
For 2018 it is expected that 44.8 million people will be gainfully employed in Germany, and 45.2 million in 2019. For the current year, the German employment rate is around 44.3 million people. Unemployment figures will continue dropping into 2019, with 2.4 million in 2018 and 2.2 million the year after. What is especially notable about these figures is that they will continue falling despite the refugee influx.
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