Covid-19 pandemic: significantly worsening environment

Demand for mobility and freight transport is declining sharply

The first half of 2020 was characterized by the Covid-19-pandemic. As a result of this pandemic, countries about the world have imposed restrictions on leaving homes, ordered businesses to shut down and imposed entry bans. The primary objectives of these measures were to stop the spread of the pandemic and to prevent national health systems being overstretched by unmanageable numbers of patients in need of treatment.

The measures placed severe restrictions on public life. The demand for mobility therefore plummeted. At the same time, the need for consumer and capital goods fell significantly worldwide, resulting in freight transport also suffering with a considerable reduction in volumes and prices. The increased transport required for medical goods and foodstuffs only slightly mitigated this effect.

Global economy in deep recession

The severe constraints on economic activity have hit the global economy at a time when growth had already lost momentum. Political uncertainties such as the trade and customs disputes between the USA and China, the USA and the EU, or the possibility of a no-­­deal Brexit, were adversely affecting trade and demand for capital goods, leading to high levels of uncertainty among companies. The Covid-19 pandemic has significantly increased this negative trend, with the result that the economic development of all regions of the world was negative in the first half of 2020. Trade in goods also declined sharply.

In addition, the Covid-19 pandemic has exacerbated any existing weaknesses in Europe. Industrial production had already fallen in 2019 and is set to decline sharply in 2020 in view of the production shutdowns and the fall in demand. At the same time, restrictions and bans on leaving homes also severely restricted consumer options. Moreover, the threat of unemployment and the fall in incomes, among others as a result of short-­­time working programs, are causing households to reduce their spending. In countries such as Great Britain, Italy, Spain and France, which have been particularly affected by the Covid-19 pandemic, these developments are more pronounced than, for example, in Germany.

In Germany, almost all sectors of the economy have been negatively impacted by the effects of the pandemic and the measures taken to combat it. Despite the lower tax income that this entails, the German Federal Government has respond­­ed with a wide range of measures, thus attempting to cushion some of the negative development. However, compared to the first half of 2019, economic value added declined significantly overall.

Energy markets

The central hedging policy of DB Group aims to minimize the effects of energy price fluctuations. Our activities are therefore not exposed to the full impact of changes in market prices, at least not in the short term.