El Niño increases financial risks for German companies

An analysis by Atradius indicates that the El Niño climate phenomenon is evolving from a weather-related supply chain issue into a significant financial risk for German companies. According to the World Meteorological Organization (WMO), this phenomenon, which causes extreme weather changes in the Southern Hemisphere, could persist until 2027.

German industry, trade, and logistics sectors are facing increasing pressure due to rising costs, delayed deliveries, and tightened working capital. The phenomenon impacts liquidity, payment behavior, and the risk of bad debt. As an export-oriented nation with few raw materials, Germany is particularly vulnerable to global market disruptions.

Crop failures in regions sensitive to El Niño can drive up global prices for essential agricultural products imported by Germany, such as coffee, cocoa, rice, palm oil, soy, sugar, and tropical fruits. These price increases eventually affect both producer and consumer prices within Germany.