German grapples with deepening economic downturns
Date
12/17/2024 7:20:05 AM
(MENAFN) Germany is grappling with a deepening economic downturn that risks becoming irreversible, according to Bloomberg. The EU's largest Economy is now in its second year of zero growth, and estimates suggest it is 5% smaller than it would have been if the pre-pandemic growth trend had continued.
The global economic slowdown and years of poor decisions have particularly impacted Germany’s export-driven industries, which make up about 30% of its GDP. The loss of cheap Russian energy, along with challenges faced by automotive giants Volkswagen and Mercedes-Benz due to rising energy costs and competition from China, have further exacerbated the situation. This loss in competitiveness is costing German households around €2,500 annually.
The crisis is expected to have broader ramifications for the EU, as Germany's decline could drag down the entire region. With a snap election looming in February after Chancellor Scholz’s coalition government collapsed, the country's future remains uncertain. The German central bank recently lowered its growth forecast for 2024 to just 0.2%, signaling that the downturn is likely to continue. Furthermore, Germany’s automotive sector is projected to lose significant market share, with a potential 40% decline in value-added production over the next decade.
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