Germany's economic rebound runs into river crisis

Berlin [Germany], August 8: Industrial orders in Germany came in above expectations in June, the country's statistics office said Thursday, but analysts warned that rivers running dry and the Mideast war could spell trouble. Industrial orders, a measure of future business activity, rose 3.1 percent in June on the previous month, Destatis said, well above the one percent increase expected in an analyst poll by financial platform FactSet. "The slight upturn in new orders is continuing," LBBW bank analyst Jens-Oliver Niklasch said. "All-in-all it seems as if the economy is doing somewhat better than was recently expected." A run of brighter-than-expected data has boosted hopes that Europe's biggest economy is defying the worst as the Mideast war has led to higher energy prices. Industrial production in May ticked up slightly more than expected, and business sentiment in July rose for the third month in a row according to a survey by the Ifo institute. But Germany's economy, suffering from US tariffs and intense Chinese competition for key exports from cars to chemicals, remains fragile, posting virtually no growth since the end of the Covid pandemic in 2022.
Industrial orders actually fell 0.5 percent in June when volatile large orders are removed from the equation, Destatis said. Flare-ups in the Mideast war as well as low water levels on the Rhine that are disrupting industrial transport could further complicate the picture, Niklasch said. "The risk posed by the oil price looms over everything in the background, and the water levels of the major rivers have added a new downside risk," he said. The Rhine river has reached record-low depths at a choke point near Kaub in western Germany amid a scorching summer and low rainfall, raising freight costs on an artery that normally carries about 80 percent of Germany's inland waterway traffic. Dwindling water levels on some of Germany's major rivers worsened by heat and drought are raising fears that badly constrained riverboat cargo traffic may deal yet another blow to the struggling economy. The Rhine riverbed is partially dry near steelmaker thyssenkrupp's blast furnaces in Duisburg, a picture of how the low waters pose a new challenge for German industry. The mighty waterway also winds past car factories, chemical plants and big river ports as it passes through the industrial heartland of Europe's biggest economy.
Shallow water is imposing tighter limits on how much ship cargo can float down the river-sending prices up for riverboat freight and heaping pressure on the government to act.
Source: Qatar Tribune