“We can no longer invest in the old, fossil-fuel technology and we don’t yet know in which new technology to invest.” – Martin Gorning, GIER
- Germany’s inability to generate meaningful growth is casting a shadow over the long-term prospects for the economy
- A country long seen as Europe’s motor of expansion is increasingly looking like a deadweight
- Of the 10 quarterly GDP readings since Scholz took office, more than half showed either nearly no growth or a contraction
- At the heart of Germany’s weakness is the manufacturing base that sustained export-led growth for much of this century
- The end of cheap gas imports from Russia was a body blow that companies are still struggling to get past, especially in energy-intensive industries
- Germany’s car manufacturers, a central pillar of the economy’s past success, are also trying to make up for lost ground as they confront China’s head start in production of electric vehicles
- Only 12% of Germany’s newly registered vehicles are electric — last year it was more than 20%
- The roots of the economy’s struggles go beyond cyclical volatility — half of an estimated 7% shortfall in industrial activity is structural
- Germany is struggling with a shrinking workforce, bureaucracy and an uncertainty over the political direction for decarbonizing the economy
- The self-imposed restrictions on government borrowing due to the so-called debt brake means there’s little leeway for public spending to address the country’s long-term economic problems – Bloomberg
