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Sectors and Resources

The Sector Research team analyses cyclical and structural developments. On the basis of its findings it draws up business and policy recommendations for the major sectors. These include the important branches of industry as well as wholesale/retail, services, energy, transportation and environmental policy

157 Documents
November 4, 2019
Region:
German exports and global trade have been moving in lockstep recently and more or less grinded to a halt in yoy terms. We found that the Bundesbank’s leading indicator for global industrial production leads German exports by 4 to 5 months. Recent declines in this indicator do speak against a recovery in German exports before the end of Q1 2020, despite recent signs of stabilization in German foreign order intake. (Also included in this issue: house prices in Germany, labour market, automotive industry and German politics) [more]
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November 1, 2019
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Between 2000 and 2018, German net energy imports declined by almost 12%. Oil and nuclear energy imports were down considerably as oil heating becomes less popular and the German government has decided to give up nuclear energy. In contrast, net natural gas imports are trending upwards. Coal imports did not start to decline until 2016 and were still considerably higher in 2018 than in 2000 because domestic coal mining was abandoned. Germany’s dependence on energy commodity imports has not declined much over time. In 2018, almost 71% of the necessary energy commodities were imported (2000: 72.6%). [more]
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September 30, 2019
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A new (green) 'fiscal deal' in Germany? The climate protection programme is no game changer for fiscal policies as it will be largely counter-financed by additional revenues. The ecological steering effect of the climate package is also limited since the initial carbon price will be low. Speculations that Germany will finally relent and embark on a decisive fiscal policy loosening have proved to be overplayed. We stick to our call that we will not see a fiscal package unless Germany enters a severe recession. Still, Germany’s budget surpluses are set to narrow considerably in 2019/20. (Also included in this issue: German labour market, industrial production, auto industry, the view from Berlin) [more]
3
September 25, 2019
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Analyst:
The climate action package is a classic example of political compromise. It aims to support climate protection without overextending private households and companies. Criticism is perfectly justified. In the final analysis, however, the climate action package is also a reflection of the society's attitude towards climate protection: Whilst a majority of Germans support more climate protection, only a few are willing to shoulder the financial burdens. [more]
4
September 20, 2019
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So far, Germany’s efforts to arrive at a more sustainable energy profile (the ‘Energiewende’) have focused on the electricity sector. However, attention is increasingly shifting towards the transport sector and its steadily rising carbon emissions. Decades-old demands, such as replacing road by railway transport, are being repeat-ed once again, even though they have been found impossible to realise. And some new concepts are being presented, such as micro e-mobility. However, their contributions to transport reform are negligible at best; they may even prove counterproductive. Ultimately, the solution is simple, if uncomfortable: long-term climate protection goals (i.e. virtual carbon neutrality) can only be reached by a considerable decline in traffic, unless technology makes significant progress. Policymakers will find it difficult to convey this message, seeing that individual mobility is one of the key concepts of a liberal society. [more]
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September 17, 2019
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Analyst:
As our planet heats up, the public debate has increasingly focused on the use of fossil fuels in the last few years, in particular coal. There is only one major exception, namely the US, whose current administration doubts that human activities are behind the climate change. German hard coal had a share of only 6% in total coal consumption in 2018. 99.9% of the lignite consumed were mined in Germany itself, namely in the Rhineland, in Lusatia and in the Central German district. A number of market observers have been skeptical about or even downright against phasing out lignite mining, mainly due to the negative impact on employment. This is probably the main reason why policymakers have decided to provide up to EUR 40 bn to support/subsidise the exit from lignite production by 2038. [more]
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August 19, 2019
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We see Germany in a technical recession, as we expect another ¼% GDP drop in Q3. Our forecast for 2019 is now 0.3%. Given no indication for a rebound we lowered our 2020 forecast to 0.7%. We acknowledge these revisions do not properly account for the recent accumulation of risks. Given the increasingly fragile state of the global economy, the realization of one or more risks could easily push the economy into a completely different scenario, where growth revisions of a few tenths of a percentage point will not be sufficient. (Also in this issue: German automotive industry, chemical industry, house prices, corporate lending, the view from Berlin, digital politics.) [more]
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July 8, 2019
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In case of a snap election in Germany, a CDU/CSU-Greens coalition could be an option. Given both camps' radically different political positions in many areas, such a coalition would require both to make significant compromises. A black-green government would need to direct its focus and its available financial resources to climate protection and the energy transition. Corporates and consumers would have to bear considerable costs. This also spells a dilemma for fiscal policy. A larger share of government spending would necessarily have to be allocated to providing subsidies and mitigating the social impact of a quicker energy transition. Citizens and corporates cannot hope for major tax relief. (Also included in this issue: German goods exports, German industry, labour market, automotive business cycle.) [more]
8
June 6, 2019
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Capacity utilisation in the German electricity sector has steadily declined over the last few years and amounted only to 34% in 2017. Much of this downtrend is due to the development of renewable energy generation. Average capacity utilisation is particularly low at wind and photovoltaic power plants, which are dependent on the weather. At the same time, these plants benefit from extremely low marginal costs and priority feed-in conditions. This enables them to (temporarily) squeeze out other electricity providers, whose average capacity utilisation has declined as a consequence. There is a political preference for natural gas to compensate for the consequences of the exit from nuclear and coal power generation during the coming years. Nevertheless, there are some risks for operators and investors. [more]
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May 20, 2019
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This edition of Focus Germany has quite a lot but rather short articles. We are taking stock of the German economy after Q1’s surprisingly strong growth. We expect the economy to flatline in Q2 and foresee an only subdued recovery in H2 given the recent flare-up of several geopolitical hotspots, rather than their hoped for de-escalation. We cross-check this analysis with deep dives into the auto and the mechanical engineering sector. We look at the impossible trinity of Germany’s fiscal policy (tax cuts, higher social expenditures and the black zero) and peek into the difficulties finance ministers are facing in the digital economy. We discuss to what extent the upcoming EP and Länder elections might spell more trouble for the Groko and introduce our new German financial conditions index. [more]
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