Germany faces risk of prolonged economic decline
Date
12/17/2024 8:46:52 AM
(MENAFN) Germany is nearing a critical turning point as it grapples with a deepening economic downturn and ongoing political uncertainty, Bloomberg reported on Monday.
The EU's largest Economy is on track for a second consecutive year of zero growth, raising concerns that its decline may soon become irreversible. Estimates suggest that after five years of stagnation, the German economy is now 5 percent smaller than it would have been if pre-pandemic growth trends had continued.
The article highlights how a combination of the global economic slowdown and years of “poor” decisions have taken a severe toll on Germany. Its export-driven economy, which contributes roughly 30 percent of GDP, faces significant structural challenges, including the loss of affordable Russian energy and struggles in the automotive sector. Industry leaders like Volkswagen and Mercedes-Benz have been hit hard by soaring energy costs and mounting competition from Chinese manufacturers.
This erosion of competitiveness is costing German households approximately €2,500 (USD2,600) per year, Bloomberg calculated. Experts warn that Germany's economic struggles could have far-reaching consequences for the rest of Europe, given its central role in the region's economy.
“Germany doesn’t collapse overnight. That’s what makes this scenario so absolutely gut-wrenchingly terrifying,” said Amy Webb, CEO of the Future Today Institute, which advises German businesses on strategy. Webb cautioned that a slow and persistent decline would not only impact German cities and industries but also drag down the entire country and, by extension, Europe.
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