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Germany: Germany Infrastructure

2012/05/21

 

 

Germany Infrastructure

Despite Germany's position as an economic driver, the continuing eurozone crisis is expected to take a significant toll on the construction and infrastructure sector. We have upgraded 2011 data, based on strong first-half data (particularly that of Q1), with further upside potential; however, there is an underlying trend toward a slowdown. The construction industry price is expected to average 1.35% year-on-time(y-o-y) increase for 2012, taking industry price to EUR99bn.

  • German carmaker Volkswagen (VW) has announced plans to invest nearly EUR1bn (US$1.44bn) in electricity generation from renewable sources over the next years. The company is seeking to acquire stakes in wind power plants and establish a partnership with German wind farm operator Windreich by end-2011. VW aims to reduce carbon emissions from its manufacturing facilities by 40% by 2020.
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  • German developer WPD has awarded Dutch construction and engineering company Ballast Nedam an engineering, supply and installation contract for 80 turbine foundations, at the 288MW Butendiek wind power plant in Germany. Under the terms of the EUR250mn (US$354.57mn) contract, the company will perform design and fabrication activities during 2012, while installation will take place in 2013. The company is to use its heavy lift vessel, Svanen, for the installation of the foundations. Each foundation will feature a monopole and a transition piece.
  • Gateway Thüringen, a joint venture (JV) between Dutch construction contractor Bam Group and French construction company Vinci's subsidiary Eurovia, secured a EUR220mn (US$298mn) contract for a 46.5km segment of the A9 motorway in Germany. The segment will be operated and maintained by Gateway Thüringen for a period of 20 years. A consortium of banks, comprising KfW IPEX and BBVA, provided debt worth EUR120mn (US$162.56mn) for the project, while the Federal government granted a subsidy of EUR88mn (US$119.22mn), and the project shareholders provided EUR12mn (US$16.26mn).

Germany is set to slip from being the fourth-major to the seventh-major economy in the world in nominal US dollar terms over our 10-year estimate period, as a result of slow real GDP increase. Increase will be constrained by increasing world competition in Germany's key capital export industries, the reticence of German consumers to spend money, and past governments shying away from market-friendly reforms.

The political challenges facing Germany over the coming decade are not so much centred around public and dealing with the potential implications of further EU integration. In general, the political risk profile in Germany remains part the best in the world.

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