Free capacities are shrinking world-wide

During the past four years the output gap in the developed economies has
narrowed considerably. The IMF expects output in this group of countries to
exceed potential for the first time in 9 years in 2018. The PMIs for large
emerging economies also show that growth in these countries has picked up
considerably in the past 18 months. PMI output prices have risen palpably in the
large developed economies since 2017.

And the trend in the emerging markets
is similar, apart from China, where the assessment of output prices has declined
since summer 2017. This means that global free capacities will shrink and there
will be fewer substitution options if there are bottlenecks in Germany. At the
global level, this might lead to stronger price increases through feedback
effects.