The upcoming presidential elections in the USA will likely bring a slowdown in investment decisions in the country. This and the uncertainty surrounding further war escalation in the Middle East will be critical for global economic growth, but especially so in Germany, says Jürgen Büchner.
As he does every year, the retired former analyst of IKB bank gave a presentation on Germany’s steel consuming industries at the MBI Infosource Stahltag conference in Frankfurt. On the Middle East, he said the potential entry of Iran would immediately boost oil prices by $10 per barrel. European buyers of liquid natural gas (LNG) would also face the danger of a blockade of the waterways, or at least detours that lead to extra costs.
On the US elections, Büchner recounted the turmoil caused by the replacement of Donald Trump four years ago. “If the transition this time turns out as unpleasant as last time from Trump to Biden, we will face massive cuts to investment decisions,” he said at the event last month attended by Kallanish. For Germany, this would be another blow, as the USA is the only major market that has thus far remained healthy for export-driven German mechanical engineering industry firms and plantbuilders.
“At last year’s conference, my forecast was still a bit more optimistic,” he noted. “We already had the Ukraine war and high national electricity prices, but we did not have a war in the Middle East yet.” On the electricity prices, he said they came down from their 2023 peaks in spring, but have since resurged, and are inching back up to €100/MWh ($109), from a recent low of close to €50/MWh.
On the positive side, he mentioned he was surprised by how quickly Germany had started building infrastructure for LNG imports. This has defied Germany’s notorious slowness in public permitting.
Christian Koehl Germany
