Kiel Institut für Weltwirtschaft

🔵 🟡 Since the Trump administration took office, US aid to Ukraine has come to a standstill, while Europe has consistently maintained its support, widening the gap in total allocations: The European continent has now allocated EUR 23 billion more than the United States. This is shown in the latest update of the Ukraine Support Tracker, which covers aids until February 2025. Smaller countries like Estonia and Denmark contribute disproportionately relative to their economic size—while larger economies such as Germany, France, and Spain are being called upon to play a more significant role. US aid has stalled since Donald Trump assumed office on January 20, 2025. No new military, financial, or humanitarian aid is observed since the United States announced its last aid package—still under the Biden administration, on January 9: EUR 480 million (USD 500 million) in military aid, including air-defense and air-to-surface missiles, as well as equipment for F-16 fighter jets. The last time US support paused for such a long stretch was in January 2024 during a congressional deadlock over a new Ukraine aid package. “The recent pause in US aid raises the pressure on European governments to do more, both in financial and military assistance,” says Taro Nishikawa, project lead of the Ukraine Support Tracker at the Kiel Institute. While Washington stalled its aid, Europe continued to announce new aid packages: In January and February the UK allocated EUR 360 million, Germany EUR 450 million, Norway EUR 610 million, Denmark EUR 690 million, and, most notably, Sweden EUR 1.1 billion. On top of it, the European Commission has newly disbursed to Ukraine the first loan of EUR 3 billion. As a result, Europe has now allocated a total of EUR 138 billion in aid since the start of the war—EUR 23 billion more than the United States. Yet, in the area of military support, the US still leads, albeit by a small margin: Since February 2022, the US has allocated around EUR 65 billion in military aid to Ukraine, roughly EUR 1 billion more than Europe. The new data underscore the large heterogeneity across Europe. Many Western European countries provide only limited aid, at least when compared to the Nordic and Baltics. Countries such as Estonia or Denmark have allocated more than 2% of their pre-war GDP to Ukraine, compared to about 0.4–0.5% for Germany and the UK, and only 0.1–0.2% by France, Italy, or Spain. In the previous report “Ukraine Aid: How Europe Can Replace US Support”, the authors show that it is mostly the large European countries—the UK, France, Germany, Italy, and Spain who would need to increase their support in order to partially or fully replace US aid. “If the ‘big five’ European countries would do nearly as much as the Nordic or Baltic countries, Europe could largely compensate for any US shortfall, especially when it comes to financial aid,” says Christoph Trebesch, head of the Ukraine Support Tracker at the Kiel Institute. Giuseppe Irto

How do China’s rare earth export restrictions shape global innovation and trade? Join the next - very timely - Kiel Trade Talk with Jan Schymik (University of Mannheim)! Abstract: Industrial policies, traditionally aimed at boosting the competitiveness of protected sectors, can unintentionally drive productivity growth in downstream sectors abroad. We document this mechanism using the case of rare earth elements (REE) – critical inputs for manufacturing and the green transformation, with production highly concentrated in China. To assess the importance of REE across industries, we construct an input-output table incorporating individual REE inputs. Using REE-related patents classified by a large language model and sectoral TFP data, we show that the introduction of REE export restrictions by China led to a global surge in innovation in REE-intensive downstream sectors outside of China. Following the adverse REE supply shock, exports in REE-intensive downstream sectors outside of China increased. To rationalize these findings and quantify the global impact of the Chinese REE policies, we develop a quantitative general equilibrium model of trade and directed technological change. Under endogenous technologies, input-supply restrictions shift the direction of innovation in downstream sectors toward scarce inputs when inputs are gross complements, which can lead to the expansion of these sectors.

📉 Joint Economic Forecast 1/2025 - Geopolitical turn intensifies crisis – structural reforms even more urgent. The spring report from Germany’s leading economic institutes delivers a sobering assessment: 🔹 GDP growth of just 0.1% expected in 2025 🔹 A modest rebound to 1.3% forecast for 2026 🔹 20% increase in unemployment since mid-2022 🔹 Ongoing structural challenges dampening growth Short-term headwinds include new U.S. tariffs, rising geopolitical tensions, and growing international competition—particularly from China. At home, businesses continue to grapple with a shortage of skilled labor, excessive bureaucracy, and policy uncertainty. While recent changes to Germany’s financial constitution provide more scope for public debt—especially for defense, climate protection, and infrastructure—it remains unclear how this fiscal space will be used in the near term. The institutes expect hardly any additional funds will be called up this year. At the same time, necessary consolidation steps are unlikely to be taken. The phase of key interest rate cuts is likely to come to an end soon. In the U.S., higher tariffs are jeopardizing price stability. In the eurozone, more expansive fiscal policy is pushing capital market interest rates higher. The current key interest rate of 2.5% is already close to its neutral level. If fiscal rules are loosened further, capital markets may take on a greater role in enforcing sustainable public finances. ⚠️ The bigger picture? Germany’s challenges go beyond the current downturn. Structural issues—from a rigid labor market to high non-wage labor costs—continue to weigh on growth. These cannot be solved by public spending alone. #Germany #Economy #EconomicOutlook DIW Berlin - German Institute for Economic Research ifo Institute – Leibniz Institute for Economic Research IWH – Halle Institute for Economic Research – Member of the Leibniz Association RWI – Leibniz Institute for Economic Research

Geopolitical tensions, rising protectionism, and economic uncertainty are redefining the rules of the game. With trade routes in flux and policies becoming increasingly unpredictable, the pressure on global supply chains has never been greater. To address these urgent challenges, Hapag-Lloyd AG and the Kiel Institute, with the support of Studio ZX | ZEIT Verlagsgruppe, are launching the World Trade Dialogue Hamburg 2025 under the theme: “Trade in Transition: The Shifting Sands of Globalization and Fragmentation” 📅 May 14, 2025 🕤 Starting at 09:30 AM 📍 Hapag-Lloyd AG, Hamburg This exclusive forum brings together industry leaders, trade experts, and forward-thinking voices from around the world to exchange insights and shape the future of international trade. 🔹 Disruptions in global trade – Geopolitical risks, rising transportation costs and climate-related challenges 🔹 Geopolitics & trade policy – The reorientation of US trade policy, WTO reforms and the rise of plurilateral agreements 🔹 Market dynamics & new perspectives – Strategic opportunities in the Asian and African markets Join us for a day of strategic dialogue and forward-thinking ideas! All Details and more information 👉 https://lnkd.in/ennS37aT Moritz Schularick Dr. Maximilian Rothkopf

🚨 KITE Insta-Analysis Update: 🇨🇳 China has imposed an additional +34% tariff on imports from 🇺🇸 USA, followed by a +50% tariff response from the US (bringing the total to 104% 🤯). The numbers largely speak for themselves. While headline figures for bystanders like 🇪🇺 EU and 🌍 BRICS appear relatively stable, they mask significant trade diversion beneath the surface. Specifically, should these new tariffs remain in place for some time, 🇺🇸 US imports from 🇪🇺 EU could increase (!), as they become relatively cheaper than those from 🇨🇳 China, whose exports to the US collapse. 🇪🇺 EU imports from 🇨🇳 China also rise—but it’s far from a flood: 🇨🇳 China redirects exports to other markets, as long as those markets don’t introduce new barriers in return. ⚠️ CAVEAT: This is a trade model we know works well for significant changes in trade costs. But what’s happening here goes well beyond trade—and beyond what this model is designed to capture. Take the numbers with a heavy dose of salt. Kiel Institute for the World Economy #TradePolicy #USChina #Tariffs #EUTrade #Geoeconomics #KITEmodel #GlobalTrade #SupplyChains

❓ Lust auf den Hotspot zwischen Forschung & Politik? Jetzt bewerben! Für unser neues Projekt "Industrial Policy Lab" in Berlin suchen wir zusätzlich noch eine Projektleitung! Gestalte Industriepolitik mit – an der Schnittstelle von Wissenschaft, Kommunikation & Beratung 👉 https://lnkd.in/eQ3iYMzr

📺 ICYMI: Foreign policy drives economic policy - that's how moderator Adam Posen wrapped up the discussion between Moritz Schularick and Kori Schake (American Enterprise Institute) at Peterson Institute for International Economics on Germany's break with the debt brake, which marks a major shift in economic and defense policy 👇 https://lnkd.in/e-UNUGYk

📢 We’re ready to grow! For our new research & policy advisory project, Industrial Policy Lab, we’re looking for 🔹 a PostDoc 👉 https://lnkd.in/eiq_vU3V 🔹 a PhD 👉 https://lnkd.in/emi4_5tm 🔹 a Data Analyst 👉 https://lnkd.in/e-_-WUE7 Apply now until April 25, 2025 and become part of our Berlin team! Spread the word! #economics #jobs #academia

Last year we kicked off the Kiel-CEPR Research Seminar series in our Berlin office. Now, it’s making its way to the mothership in Kiel 🌊🤓 Join us for the first-ever Kiel-CEPR seminar to actually take place in Kiel: We’re happy to welcome Dmitry Mukhin (The London School of Economics and Political Science (LSE)), who will present his paper: 📄 "How Good is International Risk Sharing?" Register here 👉 https://lnkd.in/eg45TQ5P Abstract: How efficient is international risk sharing? Using a conventional open-economy framework, this paper derives a new sufficient statistic that can answer this question. Our approach does not require estimating any structural parameters and can be easily implemented using macro and trade data available for a large panel of countries over several decades. In contrast to the existing methods that focus on comovement of consumption across countries and the Backus-Smith correlation, our statistic is robust to both trade frictions and financial shocks. We also argue that the non-fundamental noise in the exchange rate does not necessarily compromise the quality of international risk sharing and show how a fundamental level of the exchange rate can be recovered from the data. CEPR - Centre for Economic Policy Research

🏙️ #GREIX Stadtviertel 2024: In deutschen Städten gehen die Preisunterschiede zwischen Stadtzentren und Außenbezirken zurück. Grund ist, dass die Preise in den Zentren zuletzt im Verhältnis deutlich stärker gesunken sind. Während der Boomjahre hatten zentrale Lagen überdurchschnittlich profitiert. Die Prämie, die Käufer für Wohnungen in den Stadtzentren zahlten, ist gesunken – von 1.220 €/m² (2012 – Q1 2022) auf aktuell 1.110 €/m². Am deutlichsten glichen sich die Preise in Hamburg (-17,8 % in zentralen Lagen vs. -11,8 % in Außenbezirken) und Düsseldorf (-17,5 % vs. -12,4 %) an. „Immobilienkäufer sind zögerlicher geworden, was die Preisprämie für Top-Lagen in der Innenstadt angeht“, sagt Dr. Jonas Zdrzalek, Immobilienexperte am IfW Kiel, „das mag mit veränderten Wohnansprüchen und Pendelbewegungen in Homeoffice-Zeiten zusammenhängen.“ Die Preisspanne zwischen dem günstigsten und teuersten Viertel ist in deutschen Städten aber nach wie vor sehr hoch. – in Köln und Frankfurt betragen sie teils über 80 %. In München bleibt Wohneigentum am teuersten: Selbst im günstigsten Viertel (Moosach-Milbertshofen) liegt der Quadratmeterpreis mit 7.500 € über dem teuersten Viertel in anderen Städten. 📊 Die aktuellen Zahlen stammen aus der jüngste Auswertung des German Real Estate Index (GREIX) zu Immobilienpreisen auf Stadtviertelebene im Jahr 2024. Der GREIX ist ein Gemeinschaftsprojekt der Gutachterausschüsse für Grundstückswerte, ECONtribute: Markets & Public Policy und dem IfW Kiel auf Basis notariell beglaubigter Verkaufspreise. Pressemeldung 👉 https://lnkd.in/gsQJz2dc Alle Details im Kurzbericht 👉 https://lnkd.in/g-NEMd2H #Immobilien #Wohnungsmarkt #GREIX #Immobilienpreise Steffen Zetzmann Francisco Amaral