Low Rhine Water Levels to Slow German Economy, Bundesbank Says — Update

By Ed Frankl

Low water levels in Germany caused by recent heatwaves, particularly on the River Rhine, are likely to temporarily impede the country's economic growth, the Bundesbank said Thursday.

"The only limited availability of transport routes on major rivers and sharply rising transport costs are expected to place significant constraints on industrial output and export growth," the country's central bank said in its August monthly report.

The water gauge at the Rhine bottleneck of Kaub, near Koblenz in western Germany, notched a record low in recent days, meaning ships must carry fewer goods to pass through. Much of Western Europe endured its hottest June and July on record.

The shallow water levels are set to lead to additional delivery delays, further exacerbating material shortages, increasing transport costs and delaying production, the Bundesbank said.

"This will put a marked strain on industrial activity that has otherwise just started to strengthen," it said. The economy will likely at best only expand marginally in the quarter, it noted.

While the economy has proved more resilient than expected to the jump in energy prices in the first half of the year, some of its tailwinds will weaken, it said. Gross domestic product increased 0.4% and 0.2% in the first and second quarters, respectively, mainly driven by strong demand for its exported goods, which could unwind in the months ahead.

Some economists have pointed to the growth in exports as evidence of foreign companies temporarily stockpiling German goods before the expected rise in costs and supply issues due to the war in Iran.

Low capacity utilization in the industrial sector and the rise in European Central Bank interest rates in June are damping corporate investment, it said. However, robust recent manufacturing orders, alongside increased government investment in defense and infrastructure, will continue to support the economy.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

August 20, 2026 06:42 ET (10:42 GMT)