German Economy In Trouble? Europe In Trouble?
Germany, is the economic powerhouse of Europe, and is currently facing a myriad of challenges that are putting its economic resilience to the test. Everything started because of covid-19 and then the invasion of Russia to Ukraine make things a lot more worse the add all of the following and you have a disastrous cocktail for an economy.
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Economic Contraction
The recent data reveals a 0.3% contraction in Germany's Gross Domestic Product (GDP) in 2023, marking a significant downturn from the previous year. Multiple crises, including higher energy costs and weakened industrial demand, have contributed to this decline.Persistent Inflation
Despite recent price declines, Germany continues to grapple with persistent inflation, which has remained high at all stages in the economic process. This inflationary pressure is acting as a damper on economic growth, affecting both consumers and businesses. CPI stood at +3.7% on year per year basis.Weakening Industrial Sector
The heart of Germany's economy, its industrial base excluding construction, witnessed a notable 2% decline in 2023.Consumer Spending Decline
Household consumption fell by 0.8% on the previous year, reflecting the impact of higher energy bills and borrowing costs on consumers. This decline in spending has further contributed to the overall economic slowdown. Less spending , slower economyGovernment Spending Reduction
The government's decision to tighten fiscal policy sharply is contributing to the economic challenges. This approach is aimed at addressing inflation and stabilizing the economy, but it comes with short-term repercussions like the massive protests from the German farmers.
Government expenditure also fell by 1.7%, contributing to the economic challenges.Global Economic Hardships
Germany's economy is intricately connected to the global market, and it is currently facing headwinds from the global economic situation. Weak demand for manufactured goods, supply chain disruptions, and higher interest rates are putting additional pressure on the nation's output.Supply Chain Frictions
Germany is experiencing supply chain frictions, impacting various industries. These disruptions have been exacerbated by the ongoing global challenges, hindering the smooth flow of goods and services. And the problems down the Panama canal will make things even worse for the world economy and Germany.Energy Costs
High energy costs are posing a significant challenge, especially with the volatility in the global energy market. This uncertainty is affecting businesses, leading to an overall fear. While this was the same for the whole world Germany had even better deals for cheap gas that made their factories and the economy as a whole to rely heavily on that cheap gas and when that stopped it was not a question of if but how soon this would happen
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As you can understand, this is not just a problem for Germany and the German people in the European Union, we are all intertwined. If one member is not doing well, it can affect all of us, and when that member happens to be the biggest and wealthiest, this problem will definitely impact us all. Germany is the biggest contributor to the EU budget. Consider what will happen to the other nations if they cut the amount they provide.
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To stop buying cheap energy is only a voluntary choice by the EU government.
In the hope of destroying someone else's economy, the government has spit on the interests of its own people and the economic prospects of its own countries...
It seems that governments are acting against the interests of their own people for the benefit of a certain group of people...
Thank you!
Well Germany could use the nuclear factories to produce the needed energy cheaper without having to rely so much on Russia. But they chose to build their economy around natural gas ! It was beneficial for 20 years but not anymore
This could have been favourable further if not for some decisions of the European Parliament.
And yes, you are absolutely right, nuclear power could be a buffer in this energy crisis, especially as it is a very environmentally friendly industry.
Sounds like a consistent policy of destroying the economy of the locomotive of Europe! And the USA is naturally the main beneficiary of this situation.
I have seen statistics that electricity generation in Germany has fallen to the level of the late 70s. This is a wake-up call for the prospects of industry and economy
I’ve always been an anarchist. I remember in my circle in Milano, at the Circolo Anarchico La Ghisolfa, we were warning people about the dangers of globalization. We are now shouting out loud that this system is wrong. The solution is as simple as drinking a glass of water; we have to change the way we think.
Let me give you an example: everyone is worried about “saving the planet,” but the planet will always be here in one way or another. The problem is that we have to save humanity from “madness.” We have to save humanity. But as you clearly and perfectly explained, it’s a “disastrous cocktail for an economy.” So maybe the solution is to try to find a solution by “thinking in terms of collective decentralization.” Now the system works like this: I sell a product, and in order to sell it, I have to produce a huge quantity. Moreover, I need to create a demand, and I need to sell all of it. Moreover, if I do not sell, I waste a huge quantity of energy which I will never get back. If we would sell with respect, the banks could create “mini-decentralized-stores” filled with 3D printers able to print anything you like and a huge park of drones ready to deliver at the moment in every corner of a city. The producer would earn royalties thanks to the concept of intellectual property, banks can still make their profit moving on blockchain tech, car industries can be government-run producing drones, improve the idea of renting and pass over for a fee, create a stable and honest resource for every citizen to earn a base income and every extra he can spend as he likes, reduce travel, and move on zeppelins rather than airplanes. If you use a 3D printer in America to produce an item invented in China, you don’t pollute, you don’t create an inequity in the labor market, etc. See how simple it is? Maybe we need to stop for a minute and think in a different way. Nice article, by the way.
Yes but then the drive to produce and create better things is lost. We humans are build to live and thrive on capitalism because if we could do all that who would build the 3D printer who would build the drone who would operate and for what reason if not to earn more become wealthier and impove his own life .
The problem between Russia and Ukraine has had repercussions on the world economy, although in Germany I imagine the impact is more significant, due to the increase in energy prices and has disrupted supply chains, and in our case we have seen an increase in certain foodstuffs.
Yes exactly Germany has a real problem
i forgot to mention that the basic problem is "stake holder capitalism" there is not reasons to extract capital for the profit of the few rather then reinvesting it for the profit of many.
It's probably time the rest of us lazy and shitty EU countries start "doing business" like getting into manufacturing more shit and importing less from Germany and it's also about time we should take it to the streets and ask some questions like what happened to the energy that became so expensive? Don't tell me it's because of the war because I don't believe that. Sometimes all you need is a good crisis to revive a relatively large ecosystem. We are having similar strikes to the German ones here too and these should be all over the world. We are now paying the price in regard to inflation because we were too weak during the pandemic to defend our rights and not close entire fucking countries for a virus that was lab-made and intentionally spread, a virus that was no more lethal than the regular flu.
Yes indeed we need to produce more and not rely on countries like China or produce the energy we need to spread it between ourselves first and sell the excess. Well the prices gone up because they are being determined by speculation.The war was just an excuse to speculate that we will run out of energy and skyrocket the prices at the first months. Demand and supply played a role but fear and greed was the main reason . The bad thing is that the governments did nothing to stop those speculation at the beginning. If the EU wants to survive it must become self sufficient we are big and diverse we can produce we can grow we can build it’s just a matter of what we want
Ther EU is a satellite for America and nothing more than that...
in general everything is worse than it was in terms of economy. For example, with the average salary the average greek household is worse than it was back in 2009. We are actually 22.5% poorer :p
talk about growth then :p
I think we all need to be taking directions from @trumpman and prepare for the worst.
Indeed he is prepared and even if nothing happens he will be eating his food cans and spaghetti for years to come cheaper than us
My son has giant tins of dehydrated food in the basement :)
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It already expired I didn’t even realised it thanks !