Sectors and Resources

The external environment as well as monetary and fiscal policy should provide strong headwinds. Sentiment will likely be dragged lower by the increasingly evident structural problems. We anticipate a modest recession during the winter half to be followed by a gradual recovery from spring onwards. We expect the government to survive the internal quarrels with respect to the 2024 budget, following the constitutional court ruling. Debt brake reform is unlikely in the short run. A cross-party consensus for a Transformation Fund 2.0 might emerge before September regional elections. [more]

The potential use of synthetic fuels (e-fuels) in the transport sector has been a controversial discussion topic for several years. Both proponents and opponents of e-fuels have arguments on their side. In our view, weighing up these arguments suggests that regulation should a priori allow for technological openness so that Hayek's “competition as a discovery procedure” is possible in the first place. E-fuels could be a solution for some applications in passenger car transport that are not (well) served by battery electric cars (BEV). They could help reduce CO2 emissions from new and existing vehicles. The biggest challenges for the use of e-fuels lie in availability, still-high costs and the low energy-conversion efficiency. [more]

Production in major industrial sectors in Germany has developed very differently in recent years under the impact of the coronavirus pandemic and energy price shock. For example, manufacturing in electrical engineering rose by 18% compared with the start of 2015. In the chemical industry, there has been a 20% decline over the same period. The differences are not only cyclical, but also structural. In the future, it will be more important to distinguish between Germany as an industrial location and the German industry. [more]

Megatrends such as decarbonisation, digitalisation and demographics, as well as signs of deglobalisation, could cause structural supply bottlenecks in the 2020s. In this report, we look at commodities such as copper, cobalt, nickel or lithium, for which global demand is likely to rise faster than supply, not least due to the energy transition. The availability of labour is also increasingly becoming a scarcity factor. Due to supply bottlenecks, potential growth in Germany could be closer to the 0.5% than the 1% mark in the future. [more]

Germany is a car-loving country. With a density of 578 cars per 1,000 inhabitants, more than one in two people in Germany owns a car (including children and the very elderly). The number of cars has risen steadily in recent years and shows that - despite the climate debate, congested inner cities and the supposedly car-critical Generation Z - there seems to be no car fatigue in Germany. [more]

Germany’s growth is under pressure from renewed cyclical and structural headwinds. In this edition of Focus Germany we introduce our new Nowcast Model for German GDP, predicting that the German economy should have expanded in Q2, but that risks for activity in H2 are increasing. We take the summer break in Berlin as an opportunity for a midterm review of the traffic-light coalition’s work. In a historic flashback we revisit the challenges Germany was facing when the Economist called it the sick man of the euro and which policy measures transformed the country into an Economic superstar a decade later. We find interesting parallels to today’s situation. [more]

In this report, we analyze the recent developments in the market share of electric cars in important car markets (Europe, USA, China) and the role of German manufacturers or group brands in this market segment. The market share of German OEMs in the field of e-mobility varies in the major automotive markets. In Europe, their market share for electric cars is currently slightly below that for all new passenger car registrations. In the US, German manufacturers have a larger share of the electric car market than in the overall market. In China, however, German manufacturers are noticeably behind domestic suppliers and Tesla. In all markets, we expect competition in the field of e-mobility to continue to increase. [more]

In the second edition of our Energy Transition Monitor we disentangle the drivers of lower economy-wide energy consumption into cyclical (winter-recession) and structural (loss of production capacities, energy-efficiency measures) factors. Moreover, we take a look at the shift in primary energy sources – from gas towards renewables and coal and why we are (finally) seeing a higher speed of solar PV build-out. We also provide an update of our gas supply-demand model for the upcoming winter. Finally, we summarize current policy action aimed at boosting domestic energy capacity (solar and wind) and improve the overall economy’s energy efficiency, both at the EU and national level. Our earlier thematic analysis on German gas supply and Germany's energy transition includes: "Energy Transition Monitor #1 - what, when and how", "Costs of electricity generation: system costs matter" and "EU Green Deal Industrial Plan - status update and how to fund it". [more]

Is green hydrogen a cure-all for the energy crisis? Not in the short-term, says Eric Heymann, Senior Economist for sectors, technology and resources at Deutsche Bank Research. The medium to long-term outlook is brighter, though. [more]

Electric heat pumps are becoming increasingly popular with German homebuilders. In 2022, they already supplied the primary heating energy in more than half of all homes in new buildings. In the 1st quarter of 2023, this share even rose to 55%. Thus, heat pumps have taken over the market leadership in a short time. An important reason for the rapid growth of their market share is government subsidies, which can account for up to 40% of the total cost. [more]