Abstract
As the financial crisis continues to unfold, the German government is actively
seeking to contain the
impact on the country’s economy. A stimulus
plan of around EUR50bn for 2009, in addition to the
EUR480bn bailout plan
for the banks, features prominently among the anti-crisis measures taken by
the
government. The stimulus plan mainly aims at boosting investment over
the next three years, and the
construction sector will be the main
beneficiary from this package, along with the automobile industry to
a
lesser extent. Nevertheless, the inherent ‘time-lag’ effect of the
planned investments means that the
infrastructure sector is still likely
to contract in the next few years, and, accordingly, we have revised our
forecasts this quarter, yet again. In BMI’s Germany Infrastructure
Report Q209, we forecast that
Germany’s construction sector will
contract by 5.79% year-on-year (y-o-y) in real terms during 2009,
while we
expect positive real growth to resume in 2011.
Regarding the utilities
sector, in October 2008 it was reported that a number of coal-fired power
plants on
the drawing board would be facing increased scrutiny owing to
the credit crunch. Currently, Germany has
16 projects planned for
construction through to 2012. These projects would add another 18,000
megawatts (MW) to the country’s transmission grid. Five of the projects
are undergoing construction.
However, the other 11 projects, with a total
capacity of 11,000MW, are still seeking funding.
Important developments
have been registered in the transport sector, where A-model style
concessions
proceeded with the A5 Motorway contract being awarded to
France' s Vinci subsidiary Vinci
Concessions, in February 2009. The project
is the final of four A-Model type concessions to be awarded
in Germany.
The A-Model concession scheme was first launched in 2005 and, according to the
Federal
Minister of Transport, Building and Urban Affairs, Wolfgang
Tiefensee, “The A model pilot projects will
pave the way for
public-private partnerships [PPPs] in the construction of federal
trunk roads.” According
to Tiefensee, “Above all else, PPP
means more efficiency".
In BMI’s Infrastructure Business Environment
Ratings, Germany consistently gets a high score, ranking
in 2nd out of
twenty European countries rated, while it ranks 7th in our overall Project
Finance Ratings for
Europe.
Overall, considering the extent of the
current financial crisis, the German economy is performing well
when
compared to the rest of the eurozone. According to a recent report by French
investment group
Natixis, Germany does not face a debt leverage to
correct, and the unemployment rate still remains at its
natural level. For
2009, though, we still forecast that real GDP growth rate will contract by
4.6% y-o-y.
We forecast that the economy will begin to recover in 2010,
with the risks to our forecasts remaining
largely to the downside.
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