Set this page to:
FERI (Luxembourg) S.A.

T +352 270448-0
F +352 270448-729

18, Boulevard de la Foire
L-1528 Luxembourg

Contact form
Please accept the marketing cookies here to show the form.
Telephone CONTACT
FERI (Luxembourg) S.A.

+352 270448-0
+352 270448-729

L-1528 Luxembourg
18, Boulevard de la Foire

Contact form
Please accept the marketing cookies here to show the form.
Set this page to:
Go to FERI in:

Economics Update May 2024 - Signs of hope for the European Monetary Union

Bad Homburg, 5/7/2024
by Axel D. Angermann
  • Positive growth in the first quarter in all major countries of the economic area
  • Private consumption benefits from falling inflation
  • High uncertainty about interest rate trends for the rest of the year

Economic output in the eurozone increased by 0.3% in the first quarter compared to the final quarter of 2023. Although this was the seventh time in a row that growth lagged behind that of the US, it was the highest figure in a year and a half and all major countries, including Germany, contributed to this result. There are two factors behind the moderately positive development: firstly, private consumption is on the rise again. Falling inflation, together with relatively high nominal wage growth, is ensuring a positive trend in real incomes. Real income growth of more than 2% was last seen at the end of 2020. Although consumer confidence is still at a low level, it has improved noticeably since reaching a low point in October 2023. This trend is likely to continue and provide positive impetus for consumption in the coming quarters.

Industrial production picks up

Secondly, there are increasing signs of a turnaround in the global industrial production cycle. Important leading indicators such as Singapore's and Taiwan's exports, the purchasing managers' indices for industry and, in particular, the difference between new orders and finished goods inventories have turned positive since the beginning of the year. European industry would benefit from this, and production has indeed risen by 1.6% in the first few months of the year. There are good reasons to assume that this trend will also continue and possibly gain momentum.

In the coming quarters, economic output in the eurozone is therefore expected to continue to grow at least at the same rate as in the first quarter. The economy could receive additional tailwind from interest rate cuts by the ECB, even if the effect on the real economy will only take effect with a time lag and it must be taken into account that the central bank will probably act cautiously. Overall, growth could come close to the 1% mark in 2024.

Many uncertainties remain

Nevertheless, it is clearly too early to proclaim a new, sustainable upturn. The uncertainties remain too great for the time being. The most important concerns the development of the US economy: due to the ongoing restrictive monetary policy, a significant slowdown in economic momentum is to be expected there, culminating in a moderate recession around the turn of 2024/25. This would also have a negative impact on the European economy, especially as growth impetus from other regions such as China is still unlikely. The still fragile upturn could suffer a setback as a result. A sustained return of inflation to the central bank's 2% target is also possible, but by no means certain. High wage increases could reignite price momentum, which would put a stop to further interest rate cuts by the ECB. 

Europe is lagging behind

In the long term, restoring the competitiveness of the European economy remains a key task. The considerable gap in growth momentum compared to the USA in recent years impressively illustrates the need for this. A new EU Commission after the European elections in June should give this task greater priority than it has so far and rely more on market forces than on detailed, regulated control of politically desired transformation processes.

About Axel D. Angermann

As Chief Economist of the FERI Group, Axel D. Angermann analyzes the economic, monetary policy and structural developments of all markets that are important for asset allocation. His analyses form the basis for the strategic orientation of FERI's multi-asset strategy, for which the CIO of the FERI Group, Dr. Marcel V. Lähn, is responsible. Angermann himself has been responsible for FERI's analyses and forecasts for the overall economy and the international financial markets since 2008. He joined the company in 2002 as a macro analyst. His professional career began at the Max Planck Institute for Economics and the German Chemical Industry Association. Angermann studied economics in Berlin and Bayreuth.

About FERI

The FERI Group, headquartered in Bad Homburg, Germany, was founded in 1987 and has developed into one of the leading multi-asset investment houses in the German-speaking region. FERI offers tailor-made solutions for institutional investors, family assets and foundations in the business areas:

Founded in 2016, the FERI Cognitive Finance Institute acts as a strategic research center and creative think tank within the FERI Group, with a clear focus on innovative analyses and method development for long-term aspects of economic and capital market research.

Together with MLP, FERI currently manages assets of €57 billion, including around €18 billion in alternative investments. In addition to its headquarters in Bad Homburg, the FERI Group has offices in Düsseldorf, Hamburg, Munich, Luxembourg, Vienna and Zurich.

Media relations contact

Marcel Renné

Chairman of the Board & CEO

Rathausplatz 8-10

D-61348 Bad Homburg

Axel Angermann