Business Cycle and Growth

Growth research deals with the question which factors influence the long-term development of countries. Business cycle research, on the other hand, attempts to understand the causes of short- to medium-term deviations from the long-term growth trend and to forecast the likely further development in the short-run (typically 1-2 years).

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Traditionally, the gross domestic product (GDP), i.e. the sum of goods and services produced expressed in values, represents the central indicator of prosperity in economics. Economists have always been concerned with the question of which factors promote or inhibit economic growth in order to develop economic policies To be able to draw conclusions about how the long-term prosperity of economies can be secured or improved. In its research activities, the HWWI deals with the determinants of economic growth and explicitly includes further concepts of measuring social prosperity, such as life satisfaction, in its considerations.

Economies typically do not develop linearly along their long-term growth path. Rather, in all economies there are short- to medium-term fluctuations in economic activity to observe the growth path, the so-called business cycles. Economic fluctuations are often associated with frictions such as unemployment and inflation and create an inefficient use of economic resources. In today’s highly globalized world with complex international supply chains, there is a strong international economic context. Because of the strong international interdependence of financial, raw material and goods markets, this connection is particularly pronounced in times of financial crises, wars or pandemics. The HWWI researches the international economic context and analyzes its likely consequences for the German economy. In this context, the HWWI regularly forecasts the German economic development and also prepares a regional economic forecast for Hamburg. For this purpose, the HWWI uses the results of the quarterly economic survey of member companies provided by the Hamburg Chamber of Commerce. The survey data is also used to analyze the development of individual industries or types of companies. The HWWI pays particular attention to medium-sized companies where ownership and management lie in one hand.

As part of its economic and growth research, the HWWI also deals intensively with the development of the prices of a wide range of raw materials. The focus of the analyzes is the HWWI raw material price index, in which the world market prices of the most important products from all sub-segments of raw materials trading are recorded and condensed into a meaningful index using an objective weighting methodology. The weekly recalculation based on the latest data ensures that the information is up-to-date and generates high-frequency time series for differentiated trend and volatility analyses.


Press Releases

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07.06.2024 | Press Release 9

New HWWI Business Cycle Forecast

According to initial data from the Federal Statistical Office, the German economy started 2024 with a small plus, but the initial situation has not fundamentally changed as a result. On the one hand, the Federal Statistical Office has revised the fourth quarter of 2023 and thus the “statistical overhang” downwards, and on the other hand, the increase in the first quarter is not least due to a weather-favoured increase in the construction industry, which is actually crisis-ridden. In view of the structural problems that have not yet been resolved, the Hamburg Institute of International Economics (HWWI) therefore expects only a moderate upturn for the German economy in 2024 and 2025 and economic growth of only 1/4% and 1% on average.

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16.05.2024 | Press Release 8

HWWI-Commodity Price Index shows rising trend again

After the HWWI-Commodity price Index trended downwards in the last reporting period (November to January), the index also fell in February, reaching a local minimum of 166.2. Since then, the index has increased slightly again by 4.1% in March and 5.7% in April compared to the previous month. In April, the index averaged 182.9, which is still 4.9% below the level of the same month last year (as of 05/05/2024).

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05.03.2024 | Press Release 7

New HWWI Business Cycle Forecast

Following a 0.3 % decline in real gross domestic product in 2023, the Hamburg Institute of International Economics (HWWI) expects only limited recovery potential for the German economy in 2024 and 2025. In view of the difficult start to the year and the resulting depressed starting level, economic growth of only ¼ % on average is expected for 2024, even with a moderate economic upturn over the remainder of the year. However, even this assumes that the geopolitical conflicts do not escalate further. And even then, given the structural problems in Germany, real gross domestic product is only expected to increase by 1 % in 2025. “Against the backdrop of the worsening labor shortage, the potential for future growth will remain limited beyond 2025,” says Prof. Dr. Michael Berlemann, Scientific Director of the HWWI. In his opinion, the greatest opportunities for easing this restriction lie in digitalization, the increased use of artificial intelligence and the automation of activities, both in the corporate sector and in public administration.