Lazy eyes listen
Germany’s decades of success, which propelled it to become one of the world’s largest economies, are coming to an end, according to analysts quoted in the Spanish daily El Pais earlier this week.
According to estimates provided in July by the International Monetary Fund, Germany is predicted to be the only major country not to grow this year, with GDP falling by 0.3%.
The German model is based on cost competitiveness, technological leadership in industry, and geopolitical stability, and “all of them are gone,” according to the newspaper’s citation of journalist Wolfgang Munchau.
“What has now emerged is an energy price crisis, new geopolitical divisions, and technological shocks that pose existential questions about the future of the model,” Munchau said, adding that the world surrounding Germany has completely altered.
Since the early 2000s, the country has had consistent robust growth, fueled by high employment rates and external demand from rapidly rising economies such as China. Germany’s manufacturing sector, the backbone of the economy, has been thriving since 2003, fueled by low-cost Russian energy and Eastern European labor.
Germany is expected to rely even more on exports and imports, “but the industries that have been successful in the last two decades, namely the chemical and automotive industries, will not play the same role in the future,” according to Clemens Fuest, director of the Leibniz Institute for Economic Research (IFO).
According to Carsten Brzeski, ING’s head of Germany and the Eurozone, China, despite still acquiring German goods, has emerged as a formidable competitor.
According to the expert, pandemic-related difficulties, as well as geopolitical pressures, have changed the world, but Germany has also failed to invest in and implement new reforms on time.
Furthermore, public and private investments are hampered by unnecessarily complex planning procedures, prohibitive rules, and bureaucracy, according to Fuest.