Integrated Interim Report 2019 – Germany needs a strong rail system

Business performance

Business performance

Mixed environment for global and European transport markets

Political uncertainties dampen global trade

After high growth rates for the past two years, global trade is currently losing momentum at a considerable rate. In addi­­tion to the general deceleration of economic growth, political risks are particularly responsible for the decline in trade growth. US protectionist trade policies and Brexit uncertainties, among other things, are forcing companies to put their investments on hold, in turn putting a strain on demand for goods transport.

This is still being offset by positive conditions for pas­sen­­ger transport. Demand remains high, among other things due to rising incomes in Germany and Europe. The legal frame­work for companies operating in passenger transport remains very different in Europe despite progress­­ing liberalization.

Global economic growth is weakening – domestic demand has a stabilizing effect in Europe

Global economic growth continued to weaken during the first half of 2019. The economy in both Asia and North America is developing less dynamically than previously, but remains solid. Among other things, the tariffs imposed by the US and China have had a noticeable effect in both regions, not only increasing the direct costs of trade in goods but also the uncertainty of companies.

The current uncertainty has also added to the upward pressure on the US dollar, exacerbating the financing problems of several emerging and developing economies. Their cost of servicing debt has increased, leaving fewer re­sources available for investments. This development has also contributed to the slowdown in economic growth and world trade.

Weak demand for capital goods is currently particularly affecting European industry, which has recorded much lower export growth than in previous years. Domestic de­­mand, on the other hand, remains high. Continuing em­­ploy­ment growth and rising wages have boosted strong private consumption. Investments by European companies remains solid.

A similar development can be observed in Germany: robust domestic demand and persistent growth in construc­­tion and services are supporting the economy. However, industrial production decreased in the first half of 2019. This is partially due to low demand from outside Europe and partially due to the fact that the German automotive industry is still burdened by the certification problems of the previous year. All in all, therefore, economic growth was slightly weaker than in the first half of 2018.