Taking Stock: The cost of heatwaves

**Rahul Tandon** (0:03)
I'm Rahul Tandon, welcome to Business Daily. This is the week that this happened.

**Carsten Brzeski** (0:07)
A billboard is turning heads on Sunset Boulevard. That's because a real guy is temporarily living in a makeshift living room.

**SPEAKER_3** (0:15)
You can see him 30 feet above the sunset strip, having a great time, giving good day LA shout outs.

**Rahul Tandon** (0:21)
Yes, if you want to know what that is, that is Netflix is the last house, and they have built this incredible, go and have a look at it online, a 30 foot billboard with a fake front door and a living room, and Nathan Stoop has been living in it for three days. Taking stock of that and other stories on the program this week is Carsten Brzeski, Global Head of Macro for ING Research, joining us from Germany and Jyoti Malhotra, editor in chief of the Tribune in India, familiar voice on our program. So both of you, question to begin with, could you live inside a billboard like that for a few days? How long could you do, Carsten?

**Carsten Brzeski** (0:55)
Well, probably only a few minutes, to be honest, I would try to escape as quickly as possible. I'm so happy that I bought air conditioning in my home in Frankfurt. So I actually, I hardly ever want to leave Frankfurt again, and especially not my house here.

**Jyoti Malhotra** (1:09)
Me too, no nothing. It's called claustrophobia with a big C, so there's no question I would be.

**Rahul Tandon** (1:15)
Well, I have to tell you both there. He got paid, I would imagine a fair sum of money. So you've turned your backs on quite a sizable sum going into your bank account.
Let us focus on our main story now, because we have been talking across the World Service about weather and this impact on economies for weeks. We've been talking in particular about Western Europe and these heat waves. We are having another one I can tell you today, which is showing no signs of easing yet. And Carsten, if we can start with you on this, that is causing huge problems for Germany's industry, isn't it, particularly when it comes to the Rhine. What's been happening there?

**Carsten Brzeski** (1:54)
Yeah, definitely. Well, I think all of Europe is currently really hit also economically. I think what I hear about you guys in the UK, that's also going to have economic consequences. But what we're experiencing in Germany now is these extremely low water levels in the Rhine. We're getting to really a historical low since these statistics were recorded, which was, I think, 1880 Never been here before. Also never had before here already this early in the season.
So this means an impact on industry, on logistics. Kind of 10% of German freight goes via the waterways. But when you look at the certain industries, steel, chemical, it's 25%.
So that's going to be a severe hit. And on top of that, also that many of these industry plants actually use water to cool the production facilities. So they also will have to now reduce production capacities. And that is a kind of double whammy for an economy that has already been suffering for years now.

**Rahul Tandon** (2:54)
Let's hear from somebody who is having problems because of what Carsten was talking about there when it comes to the Rhine. Katharina Stelzer is from RWZ. They're one of the largest agricultural trading cooperatives in Germany.

**Katharina Stelzer** (3:08)
Currently, we're in a similar difficult situation to the one we had in 2018 Back then, the water level in Kaub, which is the relevant level for us, was 25 cm. Now, today, it's at 15 cm. The forecast for the end of the week, Saturday, is 9 cm.
This is, of course, absolutely catastrophic for us. We can't currently transport the goods to the processors by ship. This means that wherever feasible, we're switching to lorries to bring goods to our customers. But, as I said, only where it's feasible.

**Rahul Tandon** (3:40)
Lots of problems, as Carsten was saying, though, for the German industry. I've just come back from India, Jyoti. I always love being there. We're sort of coming out in the middle of the monsoon, coming out towards the end of it. Are climatic factors having an impact on business in India?

**Jyoti Malhotra** (3:56)
The thing about India, as you know, Rahul, is that we're used to the heat, the heat and the dust, of the summer, which goes on for about two and a half, three months beginning April and then into July when the monsoons hit all over the country, actually. But I was really interested in what Carsten was saying. I read about this here all the time in this past few weeks that Europe is burning, but I didn't quite realize how deeply it's affecting both people and businesses.