Studio Guest: Klaus Deutsch, Deutsche Bank Research

We talk with Klaus Deutsch from Deutsche Bank Research about the latest developments in global economy. DW-TV: Klaus Deutsch, let's talk economics for a minute: What about German exports. It looks like German exports are strong and getting stronger, despite fears of a global recession. Klaus Deutsch: Well, that may be not the wrong picture of the situation - I think the machine industry is doing well because it's not competing on price but all those industries that are affected by the strong euro will face declining sales in future. So we expect exports to contribute less to growth of GDP in 2008 and 2009 than previously. DW-TV: Let's get a check on where the global economy is and is headed. Time for our monthly look at the DBIX, the German International Business Index. It's based on economic data from Germany, the US and Japan and is created exclusively for DW-TV. Mr Deutsch, a slight improvement in January, down again in February. How do you read this? Klaus Deutsch: It's basically the United States not doing well these days. Here the impact of the real estate crisis and the financial crisis on economic activity can be felt clearly. The debate is focused on the question of whether we have a recession in the US or not..... DW-TV: Don't you think we do have a recession in the US right now...? Klaus Deutsch: Not in the technical sense, no. But it feels like it, and consumers are very concerned and people who manage the purcheses of big stores and companies feel there is restraint. DW-TV: I've got a little bone to pick with you, because in the past we've talked a lot about the growing euro and the pain threshold for companies. We said it was a dollar 30, a dollar 40, 50, now we're headed towards a dollar 55...when is too much too much? Klaus Deutsch: The current exchange rate is too much for many companies already. You can always buy safeguards for the short run, maybe for a year or so, to hedge against these developments. But once it's over, the hedge is done with, it becomes more and more expensive to cover your production costs and many companies are now thinking about relocating production out of the euro area, because the assumnption is: if it doesn't go down, we have to shift production to where the dollar is not a big problem.

DW-World | March 11, 2008

Tags:. .stores. .guest. .always. .research. .pick