Germany's economy is in crisis: deindustrialization and decline in production
Bloomberg reports Germany is “collapsing” and “nearing the point of no return,” suggesting its economic downturn could become “irreversible.”
Following five years of stalled growth, the German economy is currently 5% smaller than projections based on pre-pandemic growth levels. This crisis represents the most severe situation since the reunification of West and East Germany.
Attributed causes include elevated energy expenses and decreasing exports, resulting in a €2,500 annual loss for German households. A “rapid erosion of industry” is reportedly happening.
As an illustration, the nation's car manufacturing sector is predicted to forfeit up to 40% of its added value over the coming decade. Car production is being shifted to other nations.
The country's leading steel manufacturer, Thyssenkrupp, intends to reduce its staff by around 40% by 2030 and shut down two blast furnaces.
“The stability of the German financial structure, as we have perceived it for many decades, is disintegrating,” stated CEO Miguel Lopez.
Germany is facing a “very gradual, extremely prolonged decline” that may negatively impact the entirety of Europe, according to Amy Webb, founder and CEO of the Future Today Institute.
“Years of poor choices and misfortune have crippled Germany’s economic paradigm precisely when the remainder of Europe requires its industrial strength to assist the region in keeping pace with China, managing Russia’s conflict in Ukraine, and adapting to an increasingly isolationist U.S.,” Bloomberg indicates.
However, there’s also a silver lining: “Germany boasts the lowest debt-to-GDP ratio among the G7 nations, offering avenues for investment given the presence of political resolve.”
Simultaneously, the piece highlights that neither Scholz’s ruling party nor his anticipated successor, Merz from the CDU, possess innovative strategies to rescue German industry from its predicament.
