Germany used to be the world’s export powerhouse. Now, it’s not growing. What happened?

The US and/or it’s allies blew up the Northstream pipeline


FRANKFURT, Germany (AP) — The German economy is still failing to grow, figures showed Friday, as the country that should be the industrial powerhouse for all of Europe struggles with high energy prices, rising borrowing costs and a lagging rebound from key trading partner China.

Economic output in Germany stagnated in the April-to-June quarter, the Federal Statistics Office said. That follows a decline of 0.1% in the first three months of the year and a drop of 0.4% in the last three months of 2022 as the energy shock from Russia’s war in Ukraine echoed through Europe’s largest economy.

It comes after the International Monetary Fund forecast this week that Germany would be the globe’s only major economy to shrink this year, even with weak economic growth around the world amid rising interest rates and the threat of growing inflation.

In Germany, the economy has been buffeted by several challenges. Above all, its long-term dependence on Russian natural gas to fuel industry backfired when the invasion of Ukraine led to the loss of most of Moscow’s supply and to higher costs for energy-intensive industries such as metals, glass, cars and fertilizer.

“What Germany needs is a targeted impulse for investment and breathing room for our energy-intensive industry,” he said.

Yet the slowdown does not resemble a classic recession because jobs are abundant, with companies competing for workers and complaining of skills shortages. The unemployment rate was only 2.9% in May, well below the eurozone’s 6.5% — one of the lowest rates on record.

Carsten Brzeski, chief eurozone economist at ING, has described Germany’s situation as a “slowcession,” with the economy “stuck in the twilight zone between stagnation and recession.”

He said Friday that recent data “do not bode well for economic activity in the coming months.”

“In fact, weak purchasing power, thinned-out industrial order books, as well as the impact of the most aggressive monetary policy tightening in decades, and the expected slowdown of the U.S. economy, all argue in favor of weak economic activity,” Brzeski said in a note.

Germany’s woes are calling forth comparisons with the late 1990s, when high labor costs held back the country’s competitiveness. A series of labor market reforms under former Chancellor Gerhard Schroeder in 2003-2004 helped restore economic growth and Germany’s position as an export powerhouse selling industrial machinery and vehicles to the rest of the world.

Germany has no energy resources to restore it’s powerhouse position-

3 replies on “Germany used to be the world’s export powerhouse. Now, it’s not growing. What happened?”

Well that is what they intent. In the past George Friedman kept saying Poland will be the next Regional Power in Europe.

But I don’t think they will have the time to achieve it.

I know that you wish that this conflict gets solved peacefully as soon as possible. But I doubt Russia will stop at Ukraine at this point. By USA and EU’s meddling in Ukraine they woke up the Russians. The losses the Russians incurred is just too much too sweep it under the rug. The deficiencies of the military identified. And Russians have one thing Nato doesn’t. Large Scale Combat experience.

Hi Kaz
I am still hoping, daily, for a peaceful resolution- A diplomatic resolution.

It appears that NATO is already working on a military base in Poland- a new one.

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