Studio Guest - Klaus Deutsch, Deutsche Bank Research

Our studio guest this week is Klaus Deutsch, speaking about the DBIX. Klaus Deutsch is an economist with Deutsche Bank Research. Exclusively for DW-TV, he and his team are creating the DBIX, an index on the mood in the global economy. DW-TV: Klaus Deutsch, Mr. Pang obviously expects a long term boom in the world economy. Would you say he's too optimistic? Klaus Deutsch: Yes, I think so. The world economy has seen its best 3 years behind it, and there is a slow down coming forward from the United States economy, but China, Japan and the European Union may also see a slowdown in the coming years. DW-TV: Well, if your observations are correct then that should also be mirrored obviously in our monthly German International Business Index -the DVIX. And just in case you've forgotton what the DVIX is all about...Exclusively created for DW-TV by the Deutsche Bank Research. The DVIX takes into account the world largest economies, including Japan, the US and Germany and here a monthly survey by the EV Institute presents Germanys business sentiment. In the US some 400 sales managers convey their business expectations, and in Tokyo the ESI, The Economic Institutes presents the Japanese economy. And here is the latest DVIX. After a strong start to the year, it's certainly lost steam, especially in the last couple months. Well does this reflect a new trend in the world business economy? Klaus Deutsch: Yes. The US has turned around to the worst, so we see several months of very weak economic data, a growth below the long term trend, a housing crisis, probably a crisis of consumer confidence in due course. And further weakening ahead. DW-TV: So the lion's share of the DVIX decline is due to the US economy. What we will see in the next few months? Will it recover? Klaus Deutsch: Well it will probably take a year for all the effects to work themselves out , so we will see further losses, a few big bangs, in insurances and hedge funds. We will see a further drop in the production of housing in the United States, and a weak econmic situation. Probably by the end of the decade we might be out of the problem. DW-TV: What about Germany? Is the German economic recovery in danger now as well? Klaus Deutsch: Yes. Sales to the US will decrease, the Euro exchange rate is shooting up. Fortunately we do have investment goods which sell well to very rich countries. So the impact will not be as bad as for the United States. Interview: Monica Jones

DW-World | November 13, 2007

Tags:. .situation. .rich. .jones. .due. .consumer