In recent news, the German economy has encountered a series of obstacles that have led to a decline in output. Sander Tordua, a senior director at the Center for European Reform in Berlin, highlighted the triple challenges of high energy prices, trade restrictions, and competition with China as the main factors contributing to this downturn, as reported by the Wall Street Journal.
Tordua emphasized that Germany has even lost ground to China in key sectors such as automotive manufacturing. The country’s economy has also been negatively impacted by the military operation in Ukraine and the rise in inflation. Additionally, experts have observed a contraction in the service sector.
To avoid a contraction in the current quarter, the German economy heavily relies on a recovery in August and September. However, surveys conducted among enterprises indicate a weakening in manufacturing activity, casting doubt on the possibility of a swift rebound.
Back in July, Bloomberg likened the German economy to the “sick man of Europe” due to prolonged economic difficulties. Economists had already predicted a potential recession in the second half of 2023.
Previously, Germany had been the economic powerhouse of Europe, successfully navigating through various crises. However, the stability of the German economy has been shaken, posing a threat to the entire region.
Experts anticipate that Germany will lag behind other European countries for an extended period, and the International Monetary Fund (IMF) predicts that its GDP growth this year will be the slowest among G7 nations.