If anything, it is surprising that the German economy is doing as well.
Today’s IFO survey is a wake-up call for the state of the German economy. The Business Climate Survey fell to 88.4 from 91.5, which was worse than expected.
The German economy is already in a technical recession and the International Monetary Fund predicts gross domestic product
gross domestic product
Gross domestic product (GDP) is the monetary value of all goods and services produced within a country’s borders in a specified period of time, usually a year. It is used to measure the economic activity and growth of a country. Periods shorter than a year are often offered as annuals or annuals. There are three ways to calculate GDP: Expenditure Approach: Gross Domestic Product is calculated by summing up all spending on goods and services within a country. This includes consumers
Gross domestic product (GDP) is the monetary value of all goods and services produced within a country’s borders in a specified period of time, usually a year. It is used to measure the economic activity and growth of a country. Periods shorter than a year are often offered as annuals or annuals. There are three ways to calculate GDP: Expenditure Approach: Gross Domestic Product is calculated by summing up all spending on goods and services within a country. This includes consumers
Read this term to stay near zero this year before gradually rising to 1% next year, but that could be overly optimistic. Ifo expects a decline of 0.4% this year.
The foundations of the German economy are in question. It’s a manufacturing powerhouse but the sustainability of this model depends on cheap energy and we’re already seeing energy-intensive factories shut down. Equally worrisome is the emergence of the Chinese auto industry.
China looks set to win the electric car race and extend its lead in manufacturing overall as Europe struggles with energy WSJ Highlights today.
This leads to an identity crisis for the German economy which would only get worse if the value of the euro hits the ground.
One area they are pushing is green transition, but that has met with significant support from the US via the IRA.
In addition, the war in Ukraine is naturally crippling consumer confidence and there is no end in sight to the conflict.
Finally, fiscal rules in the eurozone loom as headwinds for the entire region. The Germans were strict about the rules about running a deficit of less than 3% of GDP, to the chagrin of Spain, Italy and Greece. Those rules have been suspended since the pandemic but could be reactivated next year, triggering austerity across the eurozone, and the potential political instability that comes with it.
Speaking of which, Germany’s far-right Alternative Party He won the vote to become the county leader for the first time as partisan elections are at record levels.