MLP generates over 98% of its total revenues in Germany and is therefore primarily influenced by the economic development in this market. The economic downturn in Germany that was triggered by the global financial crisis, continued during the first few months of the year. As the export-oriented German economy is so closely tied to the development of the global economy, it is being particularly hard hit by the worldwide fall in demand. In this respect the decline in gross domestic product (GDP) in the last quarter of 2008 was already significantly worsening and stood at –2.1%. For the first quarter of 2009 experts are expecting the economy to shrink by 2.2% compared to the previous quarter.
The effects of the economic weakness are now also clearly evident within the labor market. In the first quarter the unemployment rate climbed to 8.5%, compared to 7.4% at the end of last year. Many companies are utilizing the short-time working facility which is currently still tempering the negative development within the labor market.
Private consumption is unable to counterbalance the decline in manufacturing – despite efforts to encourage private consumption through government economic stimulus programs. Furthermore, the negative expectations concerning the labor market are also contributing to a dampening of private consumption levels.
The continued weak macroeconomic environment in Germany has further heightened the nervousness and insecurity of consumers. From an MLP perspective this means that clients have been hesitant in making decisions about long-term investments such as the conclusion of old-age pension contracts or investments in wealth management concepts.