(de-news.net) – Germany’s economy faces mounting pressure from extreme heat, record-low river levels, trade tensions and energy costs. Economists warn that prolonged disruptions could weaken production and shipping, while policymakers and environmental groups call for both immediate relief and longer-term climate and infrastructure measures.
Marcel Fratzscher, president of the German Institute for Economic Research, or DIW, has cautioned that the current heat wave could add to the pressures already weighing on the German economy. More heat-related illness would mean more sick days and, in turn, lower production. Against that backdrop, Fratzscher remains pessimistic about the economy’s prospects for the year and does not rule out another contraction. His current expectation is for overall stagnation, at most very slight growth, and continued weakness in manufacturing, despite a recent increase in industrial orders.
The rise in orders is a positive signal, Fratzscher said, but it is being offset by a range of adverse forces confronting businesses at the same time. Higher energy costs associated with the conflict in the Middle East, the trade dispute with the United States and other economic uncertainties are adding to the pressure on companies. For now, he considers the economic effects of record-low water levels on Germany’s rivers manageable. But the assessment could change quickly if the conditions persist: a further four to six weeks of low water, he cautioned, could turn the situation into a serious risk for the economy.
The potential disruption extends beyond the immediate effects of low water levels. If conditions on the Rhine interrupt continuous commercial shipping, the resulting economic losses could be substantially greater than earlier estimates suggested. Nils Jannsen, an economist at the Kiel Institute for the World Economy, or IfW, said the effects could be disproportionately large because the institute’s existing projections did not incorporate a complete interruption of shipping. Its earlier estimate had put the decline in German economic activity at 0.3 percent after 30 days of low water.
Jannsen said it was not yet possible to determine how much larger the economic impact would become if shipping were interrupted. A key uncertainty is whether businesses can shift to alternative supply routes for needed inputs and whether production lost because of the disruption can subsequently be made up. Until the extent of those alternatives is clearer, he said, a more precise estimate would not be credible.
Concerns intensified after the German Inland Waterway Shipping Association warned that continued declines in water levels could effectively divide the Rhine into two commercially usable sections. The warning underscored the extent to which prolonged low water could interfere with the movement of goods and place additional strain on other forms of transportation.
In an effort to increase road freight capacity, the Sunday truck-driving ban was lifted in four states: Lower Saxony, North Rhine-Westphalia, Rhineland-Palatinate and Saarland. Klaus Wohlrabe, an economist at the Ifo Institute in Munich, said the measure was unlikely to provide meaningful relief because Germany continues to face a shortage of truck drivers. In his assessment, policymakers have few options that could materially change the situation in the short term. Measures such as deepening shipping channels, meanwhile, would not produce significant effects until the medium term.
Against this backdrop, the Federal Ministry of Transportation has opened the first funding round under a new program aimed at making inland transportation more environmentally friendly. The federal government has made up to 70 million euros available for the initiative, which supports projects involving zero- or low-emission vessels as well as the infrastructure needed to operate them.
Calls grow for stronger inland shipping and infrastructure measures
Transport Minister Steffen Bilger (CDU) said the program is intended to accelerate the deployment of cleaner propulsion technologies and the charging and refueling infrastructure required to support them. The first funding round is limited to projects designed to establish green inland-shipping corridors. Companies, municipalities and other economically active organizations based in Germany are eligible to apply. More broadly, the program is intended to encourage a greater share of freight and passenger transportation to move by water.
Tarek Al-Wazir, chairman of the Bundestag Transport Committee and the Green Party’s rapporteur on inland shipping, has argued that the immediate response to low-water conditions needs to be accompanied by a longer-term strategy. He said measures such as lifting the Sunday truck restriction or postponing selected construction projects could provide limited short-term relief, particularly during the current low-water situation, but should not come at the expense of urgently needed investment in the rail network.
Given Germany’s infrastructure backlog, Al-Wazir said a blanket suspension of construction would be the wrong approach. Instead, planned projects should be examined individually to determine whether some work can be temporarily postponed or reorganized while keeping particularly important freight corridors open. At the same time, he called for the inland-shipping sector to become more resilient to drought and criticized plans to halve funding for low-water vessels in the 2027 budget. In his view, that reduction should be reversed.
The environmental organization BUND is also pressing the German government for stronger climate action. Chairman Olaf Bandt said the record temperatures experienced on land and at sea should serve as a warning that substantially greater efforts are needed both to reduce emissions and to adapt to the effects of climate change. He argued that Germany remains insufficiently ambitious and identified the shift from fossil fuels to renewable energy as the most effective means of reducing climate-related risks.
That transition, Bandt said, includes measures such as replacing gas heating with heat pumps, conventional vehicles with electric cars, and greater reliance on rail transportation. He criticized the government for slowing progress in those areas, arguing that the current approach is increasing risks for both the population and the economy and should therefore be corrected.
Bandt also called for stronger measures to protect people from extreme heat, particularly through cooling strategies in densely built urban areas. Urban trees, he said, are among the most effective forms of natural cooling, yet funding for new plantings and urban redevelopment remains inadequate.
His warning comes as Copernicus, the European Union’s climate monitoring service, has reported that temperatures in Western Europe broke records in June and July, making those months the hottest summer months recorded since measurements began. The developments add another dimension to the economic concerns raised by Fratzscher and others, as extreme heat, low water levels and related disruptions are increasingly being considered alongside the more conventional pressures facing Germany’s economy.
