Future overall economic development
The regional focus of our business is on Germany, where we generate around 98 % of total revenues. The development of the German national economy is therefore extremely important for the success of our business.
Economy takes dramatic nosedive
Following the collapse of the economy in mid-2008 due to the acuteness of the international financial market crisis and its effects on the real economy, the overall economic development prospects in Germany do not look good for 2009 and 2010. All economic forecasts have been adjusted downwards. The International Monetary Fund (IMF), for example, anticipates a 2.0 % drop in economic performance for the Eurozone in 2009. With a predicted negative economic growth of 2.5 %, the outlook for Germany is also not so bright. As such, Germany is in its deepest recession since the Second World War. Even the oil crises of the 1970s and ’80s only caused the German economy to shrink by 0.9 % and 0.4 % respectively. Even with the measures to stabilise the financial markets, the relaxing of the monetary policy and state economic stimulus packages, experts do not expect to see any improvement to the economic situation until the second half of 2009 at the earliest.
Growth of 0.2 % is being forecast for 2010 in the Eurozone. Germany should then also get back on its growth course. Gross domestic product growth of 0.1 % is expected for 2010.
Anticipated economic growth in Germany
MLP target client group with advantages
Following a time lag, a corresponding burden is also expected to be placed on the employment market. According to calculations of the Deutsche Bundesbank, unemployment is set to increase by an average of 100,000 people in each of the next two years. The Ifo Institute considers it possible for unemployment in Germany to once again reach the four million mark in 2010. The EU Commission expects unemployment in Germany to rise from 7.1 % at the end of 2008 to 7.7 % in 2009. And for 2010 this rate is likely to rise further to a level of 8.1 %. However, it is important to note that MLP’s target client group of academics and other discerning clients have significantly better chances on the employment market than those with fewer qualifications. As such, our target group is less likely to be affected by an increase in the rate of unemployment over the next few years.
With regard to the development of disposable income, economic researchers above all predict a further drop in price increases for 2009. If energy prices remain stable in the coming months or even drop further, this should put Germans in a buying mood and enable continued sales of savings and old-age provision products.
The tax cuts initiated by the German government and other measures to stabilise the economy will, in our opinion, not be able to prevent the drop in economic output and at best will only slow it down.
Overall economic influencing factors on MLP’s business development in 2009 and 2010
|Expected influence on MLP’s business development in 2009 and 2010|
|Expectations about economic situation in the future (financial and economic crisis)||--|
|Higher rate of unemployment||-|
|Savings rate increase||+|