The halting of the Russian gas supply is threatening the attractiveness of Germany as an industrial location. Not only has the energy price crisis led to significantly increased producer prices in the industrial sector.
The Economic Consequences of the Energy Price Crisis as Exemplified by the Pharmaceutical Industry in Germany
German Economic Institute (IW)
The halting of the Russian gas supply is threatening the attractiveness of Germany as an industrial location. Not only has the energy price crisis led to significantly increased producer prices in the industrial sector.
Some companies in energy-intensive sectors had to shut down production lines as they could not maintain competitiveness. While the discussions on the long-term economic consequences of rising energy prices centers on energy-intensive industries, this focus is too narrow. This study focuses on the example of the pharmaceutical industry to show that other factors are also relevant. Despite its below-average energy intensity, the long-term energy policy is leading to adjustment burdens due to the industry-specific energy mix, high intermediate inputs from energy-intensive industries, and regulated drug prices. In response to the higher European energy price levels and the resulting weakening of the economic location, pharmaceutical companies could reconsider their planned and future investment decisions in Germany. To improve its attractiveness, Germany needs to do two things. On the one hand, sector-specific framework conditions must be improved to ease the strain caused by increased costs and regulated prices. On the other hand, the necessary transformation processes will require political support, and particularly an increase in investment to accelerate the expansion of renewable energy sources.
The Economic Consequences of the Energy Price Crisis as Exemplified by the Pharmaceutical Industry in Germany
German Economic Institute (IW)
Critical Raw Materials: Corporate Exposure, Supply Risks and Adaptation Strategies
Critical raw materials are vital inputs for key technologies and thus for industrial competitiveness.
IW
A Different Kind of Oil Shock
Despite the unprecedented scale of the unfolding energy crisis, the Gulf states are unlikely to accrue the kind of windfall profits they captured in 1973 and 1979 – this may worsen the impact of the energy crisis on Germany, which historically profited from Gulf exporters’ “recycling” their profits into German industry.
IW