Germany's economy struggles due to political instability at home, abroad
Date
11/14/2024 3:52:56 AM
(MENAFN) Germany's economic growth is being hindered by a lack of public investment, bureaucratic obstacles, and high operational costs, which have led to stagnation. This has caused the country to fall behind both within Europe and on the global stage, especially amidst political unrest both domestically and internationally.
Traditionally, Germany's growth was fueled by globalization and affordable energy, which helped improve wages and living standards. However, this growth model now faces significant structural challenges and geopolitical risks.
With rising global protectionism and the Russia-Ukraine conflict driving up energy prices, Germany's real GDP has struggled, performing the worst among G7 countries since the COVID-19 pandemic. The economy remains heavily dependent on trade with the US and China, faces high energy costs, lacks sufficient investment, and is burdened by unfavorable demographics.
The global economic slowdown has severely affected Germany, especially its export-driven sector, which makes up 30 PERCENT of its GDP. Increased competition from China and rising energy costs due to the Ukraine war have compounded the challenges. Additionally, rising inflation in the eurozone has led to interest rate hikes, prompting German companies to scale back on investments. Meanwhile, countries like China and Türkiye are increasingly manufacturing goods they once imported from Germany, putting further pressure on its industrial growth.
Germany's past reliance on cheap labor from Eastern Europe, defense outsourcing from the US, and importing affordable energy and intermediate goods to label as "Made in Germany" can no longer sustain the economy.
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