Macroeconomic environment
Following the sharp decline in economic development in Germany – where MLP generates over 98% of its total revenues - during the first quarter of 2009, the second quarter was characterized by significantly lessening momentum in the economic downturn. In the first quarter, the gross domestic product (GDP) as compared to the preceding quarter almost collapsed, falling by 7.8%. For the second quarter of 2009 the German Institute for Economic Research (DIW) is now forecasting a decline of just 0.8% compared to the first quarter.
The situation on the financial markets eased and the downward momentum of the global economy stabilized to some extent. In the second quarter the huge worldwide stimulatory monetary and fiscal policies also had an increasing effect on the German economy. During the course of the first half-year private consumption became a pillar of support for the German economy. In Germany, disposable incomes increased thanks to economic stimulus package measures and a stable price environment. Even the worsening labor market did not, as yet, negatively affect the level of private consumption. Although the unemployment rate rose from 7.5% at the end of June 2008 to 8.1% at the end of June 2009, many companies are currently still managing to bridge the weak order book situation by implementing short-time working practices. However, during the further course of the year the anticipated worsening of the employment situation is likely to increasingly affect private consumption levels.
During the period under review, the difficult macroeconomic environment negatively affected MLP’s business development. The continuing recession and the uncertainty about the future state of the labor market led to significant restraint on the part of our clients with respect to long-term investment decisions. This negatively affected our core business areas of old-age pension provision and wealth management.
German GDP, Change in % compared to the previous quarter
