Germany’s economic growth faces challenges amid political unrest locally, globally
Date
11/13/2024 8:28:20 AM
(MENAFN) Germany’s economic growth is currently facing several challenges, including insufficient public investment, bureaucratic obstacles, and high location costs. These factors have caused stagnation, leaving the country behind in Europe and globally, especially amid political unrest both at home and abroad.
Germany's growth model has traditionally depended on globalization and affordable energy to drive wages and improve living standards. However, this model is now encountering structural issues and geopolitical risks. The rise in global protectionism, along with the Russia-Ukraine war driving up energy prices, has put additional strain on Germany’s real GDP, which has ranked the lowest among G7 nations since the pandemic.
The country’s export-driven economy, which accounts for 30 percent of its GDP, has been hit hard by the global economic slowdown. Increased competition from China and rising energy costs have compounded the situation, further weakening industrial growth. Additionally, as nations like China and Türkiye begin producing goods that they once imported from Germany, the country’s industrial sector faces even greater challenges.
Germany’s reliance on cheap subcontractors in Eastern Europe, defense outsourcing from the US, and importing low-cost energy to label goods as “Made in Germany” is no longer enough to sustain its economy. Despite narrowly avoiding a technical recession, with just a 0.2 percent growth in the third quarter, the economy shrank by 0.3 percent last year due to high inflation, energy prices, and interest rates.
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