In this commentary we provide an update to DBRS Morningstar’s Baseline Macroeconomic Scenarios. Key highlights include: -- Economic data continues to show resilience amid tighter financial conditions. Forecasts for 2023 continue to improve, while expectations for 2024 are generally worsening as projected slowdowns are pushed further out into the future. -- While a mild advanced economy recession will likely have a limited impact on rated sovereigns, the risk of a deeper downturn in 2024 canno...
DBRS Ratings GmbH (DBRS Morningstar) confirmed the Federal Republic of Germany’s (Germany) Long-Term Foreign and Local Currency – Issuer Ratings at AAA. At the same time, DBRS Morningstar confirmed Germany’s Short-Term Foreign and Local Currency – Issuer Ratings at R-1 (high). The trend on all ratings is Stable.
This commentary provides an update to DBRS Morningstar's Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from a simple median calculation across various external contributor forecasts. In this update, we discuss the deteriorating outlook for 2024. To date, we note that the March 2023 bank failures have had only a modest impact on forecasts. We continue to see considerable downside risks to the baseline. Key Highligh...
In this latest edition of the DBRS Morningstar Macroeconomic Update for Europe, we discuss how inflation persistence may prompt the European Central Bank and the Bank of England to raise interest rates further. Key Highlights EURO AREA • As interest rates increase, credit growth has started to slow. Energy prices have fallen but core inflation remains sticky, pointing to further monetary tightening in the coming months. • With the energy crisis fading and the labour market remaining strong, ...
The recent energy crisis has changed the medium-term outlook for the German manufacturing sector. Although gas and electricity prices have receded from their August 2022 record highs over the past months, they seem unlikely to return to their pre-crisis levels over the next few years. This commentary highlights some of the main factors that are likely to keep German electricity prices elevated over the next years and assesses the vulnerability of different manufacturing industries to high-for-lo...
Budgetary figures of Germany's central government show a sharp increase in interest expenditure over the past two years. The 2023 budget puts central government interest expenditure at EUR 39.9 billion (8.4% of total expenditure), up from just EUR 3.9 billion (0.7%) in 2021. This commentary explains that this tenfold increase in central government interest expenditure is not primarily driven by coupon interest payments on outstanding debt. Instead, central government interest expenditure figures...
This commentary provides an update to DBRS Morningstar’s Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from a simple median calculation across various external contributor forecasts. In this update, we discuss the ongoing monetary tightening and bleak outlook for 2023. Key highlights include: -- Forecasts for 2023 have deteriorated in recent months. Growth will be very weak or negative for most major economies. -- ...
DBRS Ratings GmbH (DBRS Morningstar) confirmed the Federal Republic of Germany’s Long-Term Foreign and Local Currency – Issuer Ratings at AAA. At the same time, DBRS Morningstar confirmed Germany’s Short-Term Foreign and Local Currency – Issuer Ratings at R-1 (high). The trend on all ratings is Stable.
DBRS Morningstar has published a commentary analysing the financial position of households in the euro area and their degree of resilience in what is now a far more challenging environment. Key highlights include: • COVID-19 interrupted the consumer deleveraging trend in the euro area, which nevertheless started to revert in Q3 2020 as income growth rebounded. • Wages and salaries started growing again post-pandemic, but this will only partially offset inflationary pressures. • Whilst househ...
In this latest edition of the DBRS Morningstar Macroeconomic Update for Europe, we discuss how the energy crisis is afflicting the euro area economies and the UK ahead of winter. Key Highlights EURO AREA • DBRS Morningstar expects slow growth in the EA in the near term, as economic activity is affected by Russia's invasion of Ukraine, especially through weaker confidence and higher inflation. Consumer confidence fell in March to its lowest level since May 2020, DBRS Morningstar expects growth ...
This commentary provides an update to DBRS Morningstar’s Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from a simple median calculation across various external contributor forecasts. In this update, we discuss the ongoing monetary tightening and growing risks of recession. Key Highlights • Baseline forecasts are becoming increasingly bearish, particularly the outlook for 2023. High inflation, energy and labor sho...
The economic outlook for Germany has deteriorated in recent months due to high energy price inflation and rising gas security risks. The sharp increase in global energy prices has weakened the purchasing power of domestic households and weighed on business costs and business and consumer sentiment. Moreover, high uncertainty about the future scale of Russian gas supplies has raised gas security risks particularly for the upcoming heating season. This commentary takes a closer look at recent gas ...
This commentary provides an update to DBRS Morningstar’s Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from a simple median calculation across various external contributor forecasts. We also explore some noteworthy risks to the baseline scenarios, and briefly discuss some potential implications for credit ratings. Key highlights include: • 2022 growth projections have deteriorated in recent months, dri...
DBRS Ratings GmbH (DBRS Morningstar) confirmed the Federal Republic of Germany’s Long-Term Foreign and Local Currency – Issuer Ratings at AAA. At the same time, DBRS Morningstar confirmed the Federal Republic of Germany’s Short-Term Foreign and Local Currency – Issuer Ratings at R-1 (high). The trend on all ratings is Stable.
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