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DEUTSCHE BAHN AG
Fiscal consolidation measures are likely to lead to reduced
government spending in 2011, while higher taxes, or the elimina-
tion of tax breaks, are anticipated to shrink disposable income.
Consumer spending is likely to be burdened by low capacity
utilization rates and ongoing problems in the real estate markets
in some of the Eurozone countries. On the other hand, the very
low level of interest rates is expected to further encourage
capital expenditures. Exports are likely to benefit from global
trade, even though it is growing at a weaker pace than in the
previous year. In view of the diminished outlook for the economy
and the phasing out of short-time work (Kurzarbeit), employment
levels are only expected to rise slightly.
The economy is likely to stabilize in most of the countries
in Central and Eastern Europe in 2011. In view of the anticipated
modest expansion of the domestic economy we expect that the
recovery will be primarily driven by foreign trade. We also expect
that demand for capital spending will remain weak in most
countries and consumer spending will be dampened by govern-
ment spending cuts and generally rising unemployment levels.
The latent risk of a currency crisis still exists in countries with
macroeconomic imbalances. The region’s GDP is likely to remain
higher than the EU average in the coming years.
The German economy is also likely to continue to recover
in 2011, although by about a slower 2.5 % rate of growth due to
the weakening pace of the global recovery. By the end of
2011 overall economic output for the German economy could
return to the pre-crisis level recorded in the first quarter of 2008.
It appears likely that the upswing will broaden. Although German
exports could remain the primary driver powering the upswing
in the economy, domestic demand is increasingly benefiting
from foreign trade. The pace of growth for exports is likely to
track weaker growth in customer markets in 2011 and slow by
almost 50 %. Capital expenditures by companies are expected
to rise further. In addition to outlays to restock inventories and
replace equipment, which were postponed because of the crisis,
rising capacity utilization rates urgently require investments be
made to expand production capacities. The construction sector
is likely to be favorably influenced by increasing demand for
residential housing, which is being driven by the historically low
financing costs.
In contrast, public-sector spending is burdened by the expiration
of the economic stimulus programs and a tight budget situation
at the municipal level. As a result, it has very little room to
expand, and capital spending is likely to be restrained despite
the dynamic pace of growth in the private sector. Supported by
rising employment levels and an improved income situation,
consumer spending is expected to rise notably. The increase in
employment levels in 2011 is likely to grow at a slower pace
than in the previous year due to a statistical base effect. The
unemployment rate is expected to decline, however it will be
hindered by changing overall conditions and a slight rise in the
labor supply. As of may 2011 all of the still existing restrictions
limiting access of workers in Central and Eastern EU member
states to the rest of the EU will expire. This could result in
higher numbers of commuters. Furthermore, the end of the
military draft as of the summer of 2011, as well as the double
number of students completing their upper secondary school
education (Abitur) in some Federal states are likely to increase
the domestic labor pool.
The global economy is currently facing major risks due to the
instable situation in the Arab world. If the political crisis spreads
to the major oil-producing countries it could push commodity
prices even higher and increase the risk of inflation. This could
also lead to a decline in real income levels in industrialized nations
and choke off consumer spending thereby notably hindering the
economic recovery.