World

Euro Focus: Germany is facing a perfect storm & More News Headlines

 

The German economy is quickly approaching a perfect storm. The war in Ukraine has probably marked the end of Germany’s very successful economic business model: importing cheap (Russian) energy and input goods, while exporting high-quality products to the world, benefitting from globalisation. The country is now in the middle of a complete overhaul, accelerating the green transition, restructuring supply chains, and preparing for a less globalised world. And these things come on top of well-known long-standing issues, such as a lack of digitalisation, tired infrastructure, and an ageing society, to mention a few.

In the coming weeks and months, these longer-term changes will be overshadowed by shorter-term problems: high inflation, possible energy supply disruptions, and ongoing supply chain frictions. Last but not least, since the summer the shorter-term problems have become larger as low water levels and a new gas levy have added to inflation and recession concerns.

Low water levels
Like many parts of Europe, Germany has been hit by a long, unprecedented drought. Water levels have been dropping continuously over the summer and last week. Barges can no longer be loaded at full capacity but at a maximum of one-third and some routes will be cancelled. But there’s more: industry facilities on the Rhine River shores will increasingly have problems using water for cooling.

Back in 2018, low water levels shaved off some 0.3 percentage points of German GDP growth over two quarters. However, back then, the low water period only came in late September. This time around, low water levels have come earlier and there is little rain relief in sight. To make things worse, waterways are essential for coal transportation, which in turn is needed to offset less gas from Russia. This means that unless the weather brings any substantial relief, the low water levels will do more economic harm than in 2018. We expect the low water levels to shave off at least 0.5 percentage points of GDP growth in the second half of the year.

Gas levy and high energy prices
The German government announced a gas levy for households and businesses, which will come into effect in October. This levy is meant to cover the additional costs incurred by gas providers, as higher wholesale gas prices couldn’t be passed through to consumers.

Almost half of all German households are heated using gas and it remains an important energy source for industry. According to government estimates, the levy will lead to an additional cost of around 500 euros per year for a four-person household. However, don’t forget that next winter, energy providers will be able to pass through higher energy prices to consumers as they can adjust prices once a year. Households and corporates will be facing energy bills two to four times that of recent years. The government is currently discussing additional compensation measures for lower-income households, possibly an increase in child benefits, income tax reductions or direct financial support.

Recession has become inevitable
An economic recession in Germany was already our base-case scenario at the start of the summer, due to high energy and commodity prices, ongoing supply chain frictions, and the war in Ukraine. With these latest developments, the question is no longer whether the economy will enter a recession; the only question is how deep it will be.
Source: ING

World Latest News Update

I tried to provide you all the most recent news that is now accessible via this website because I know that you will appreciate all of this news since we always give it in this news. Whatever the most current information was, it is a hot issue.

It was always our goal to ensure that you received the most recent news in the following categories: electricity news, degree news, donation news, bitcoin news, trading news, real estate news, gaming news, trending news, digital marketing, telecom news, beauty news, banking news, travel news, health news, cryptocurrency news, claim news You can also share this information with your friends and family. Give whatever details you have 

The news I produced and shared with you will be very much to your liking. In order for you to learn about trending news subjects, which is what we hope you will be able to accomplish, we will continue to provide themes for you to read about.

Breaking News Today

all types of news without going through us, allowing us to provide you with the most recent information for free, allowing you to improve by learning about that news alongside you. Later, we’ll move on.

so that you can always be updated and get here more sorts of news that I provide for you, we will publish information on more current events and other types of news on our website.

Today’s Big News Headlines

All of the information I’ve provided to you, including trending news, breaking news, health news, science news, sports news, entertainment news, technology news, united states news, united kingdom news, australia news, new zealand news, canada news, finland news, china news, israel news, germany news, luxembourg newsbusiness news, and world news will be the most unique 

best data that can be found anyplace. I’ve taken these steps to make sure you remain informed, stay on top of the issue, and keep getting free updates on today’s news till today. Always take two steps ahead.

News – Times . This Is Not My Content So If You Want To Read Original Content You Can Follow Below Links

newstimes.com.ng🡽

Back to top button