Germany went from envy of the world to the worst-performing major developed economy. What happened?
Germany went from envy of the world to the worst-performing major developed economy. What happened?
Germany racked up one economic success after another for most of this century. But the loss of Russian natural gas due to the war in Ukraine has dealt a severe blow to its industry through higher energy costs.
For most of this century, Germany racked up one economic success after another, dominating global markets for high-end products like luxury cars and industrial machinery, selling so much to the rest of the world that half the economy ran on exports.
Jobs were plentiful, the government’s financial coffers grew as other European countries drowned in debt, and books were written about what other countries could learn from Germany.
No longer. Now, Germany is the world’s worst-performing major developed economy, with both the International Monetary Fund and European Union expecting it to shrink this year.
"Germany is hugely successful and has been for years, but now it's success is slightly shrinking."
Now please blame socialism and I got that sweet capitalist circle jerk bingo
They did interview both a CEO and a banker for this article so they did their best to get some diverse insights.
Blame the absolutely deranged state of German leadership that brought us such things as Ostpolitik, Nordstream 1 & 2, replacing nuclear power with brown coal power plants and green washing 'natural gas'.
It is just sad. Until about 2010, Germany was pioneering solar technology.
germany was and is one of the better working socialistic democracies. calm your prosecution fetish
I don't feel persecuted, I just want to point out how stupid it is to portrait even the slightest economic hiccup as a major failure, especially after facing two crises in short succession (with the climate crisis not even counted).
In fact, what you pointed out is among the reasons for that: All things considered, Germany is doing pretty OK. And I think economic growth is a much easier to solve problem than becoming a more sustainable economy/society (i.e. having social stability, fixing the education system, becoming less polluting and more independent from the global superpowers).
Lol
Lmao even
What kind of propaganda non-sense article is that? I live in Germany. We're doing absolutely fine.
We must live in two different Germanies than. I travel a lot and other countries are moving forward a lot faster than we are. Thanks to the CDU we weren't doing much until recently. There are many topics that need attention, especially infrastructure, buerocracy, public health and retirement insurances, corruption aka "lobbyism", and the list goes on. That's all things you could fix one by one, but looking at how/what people vote, there won't be any progress in the next decade imho.
Funny how this comment can fit most of western Europe
It might be overstating some things, but I've heard quite a few hardware startups fail the past years due to parts shortage, rising parts costs, energy costs, etc.
On the large industry scale the machine is ticking away just fine, but I've experienced first hand how those factors have decimated any reserves small players have over the past few years. And large companies don't innovate nearly as much as small ones can - competitive advantages for the future are definitely lost here. While that may not be a problem today, that does mean Germany will be behind on innovation in 5 - 10 years.
You don't do business in Germany then because I've been hearing otherwise of late.
Like most other countries, we've had to deal with COVID, inflation+countermeasures and climate troubles. And as an export nation, we've likely even been hit relatively badly by such global issues.
So, of course, not everything is entirely rosy. And of course, you'll find people complaining.But this article makes it sound like we've entered a massive crisis. As if the Germany of today looks like a poor nation compared to the Germany five years ago. And that's just not the case. We're still filthy rich compared to most countries. Our current government is pushing the country forward again (after 16 years of stagnation before the pandemic). The fruition of these measures will obviously take some years to kick in, and we will now have to deal with climate change, whether we like it or not, but ultimately, it feels like our economy (+ the things that actually matter) are on an upward trend again.
Well it must be true because the author is an expert of the topic! That and Yeezys I guess (https://fortune.com/author/david-mchugh/)?
In terms of energy, the major fuckup was making gas cheap and electricity expensive (with taxes and renewable subsidies paid by private consumers).
If gas is 6 cents per kWh and electricity 35, no wonder people were installing gas heaters instead of heat pumps. Gas now being 9 and electricity 40 doesn't make it much better.
A heat pump would have to give you 4.4 kWh of heat for 1 kW of electricity to make financial sense even if it didn't cost more (Wikipedia: "Test results of the best systems are around 4.5. When measuring installed units over a whole season and accounting for the energy needed to pump water through the piping systems, seasonal COP's for heating are around 3.5 or less.")
No more cheap russian gas and oil, internal combustion engine expertise and all the associated pieces and submarkets being phased out in favour of simpler electric cars...it's going to be a few hard years until they find a new export industry to perfect. I'd expect hydrogen-based aviation or pharma, maybe even semiconductors, they'll figure it out.
Well if Mercedes and BMW could stop making electric cars as ugly as humanly possible we would quickly see them take that market back. Lucid makes an INCREDIBLY gorgeous car and if I was in the market for an 80k plus dollar EV it would certainly be that over the ugly EQS sedan and the i7 EV with its buck teeth. The German automakers are stuck in a loop right now and I hope they’ll soon get out. As for Germany’s other economic sectors; much like the rest of the world everyone is still recovering from Covid economy shock. Especially when we went from producing nothing for 1-6 months, then slowly starting, then ramping up like crazy and now coming back down to reality. It’s going to be a rough couple years of Capitalism having to learn that businesses and economies staying flat isn’t a bad thing. No progress, but no loss either. Germany isn’t alone in this.
Ugly? Why do people fetishize their cars? I want it to work efficiently, be safe and cheap to maintain...if it looks like a gherkin, so be it 😄 The problem with German electric cars is not that, it's that atm they can't compete with China in price and they have no tech edge in supply chains anymore. Also, newer generations in Europe aren't as obsessed with owning a car anymore (I think).
At this late stage of Neoliberal Capitalism, what's deemed "economic success" is a measly 2% GDP "growth" and for Germany that can just be from exploiting its access to cheap hydrocarbons from Russia, something which is now pretty much over.
Meanwhile, like everybody else, Germany is suffering the cummulative effects of 4 decades of neoliberalism and its "oh so special" way of managing the Economy (unconditional saving of Financial giants that overextended themselves, like Deutsche Bank, maximizing rewards for asset ownership and pumping up asset bubbles all over the place and so on) not just directly but also indirectly because you're seeing empoverishment on a per-capita level in the countries to which German companies exported.
I think (all of this is opinion) that the general late stage Neoliberal Capitalism malaise is affecting most western countries and then Germany, thanks to that extra push of loosing the golden goose of cheap hydrocarbons (which was so great for the likes of BASF) is just this little bit worst than most, and after a decade which normalized a few percent of GDP increment as "growth" it doesn't take much of a "push" to have what is mathematically a large percentual difference in "growth" rates compared to the rest (i.e. when "growth" is 2%, loosing a mere 1% results in half the "growth").
Last but not least, as we're living in Peak Bullshit Times when it comes to Politically Important Financial Figures, all of this ends up reported with no sense of proportion so tiny changes in a aggregate figure (not even per-capita) that doesn't even map to most people's experience are portrayed as enormously important (notice how in the "good times" we were told 2% was the country "growing", when that value is statistically within the margin of error of the very processes used to produce those figures).
Also, this neoliberal course fucked up education somewhat fierce. We simply can't deliver the quality anymore as more and more experienced engineers (the main driving force behind those exports) are retiring. And don't get me started on the terrible internet/cell infrastructure!
Because we legitimized the financial sector as a net benefit to society, historically they were considered a net negative, but now all the smart kids want to go into investment banking.
Boom and bust galore.
Don't worry about BASF they've been preparing for the end of fossil fuels for decades and have a gazillion replacement recipes in place that they were already using depending on the oil price: If necessary they can produce all their precursors and therefore everything from e.g. starch, they're also one of the primary investors in hydrogen infrastructure.
OTOH they're nowhere close to being the poster-child of green chemicals, that honour goes to Werner & Mertz (and a couple of even smaller companies noone has ever heard of, e.g. folks working on lignin-based plastics).
And they didn't use those recipes before, no doubt because the profit margins with those are lower.
It doesn't take much of a loss in profitability for a company as large as BASF to pull down Germany's GDP if only a little bit (and when the difference between GDP growth being reported as "strong" or "weak" is all of +/-1%, every little bit counts).
And then on top of that there's other companies directly or indirectly dependent on cheap hydrocarbons, as well as the whole situation of the high dependency of German Households on gas for heating.
I for one think that over the long run getting rid of its hydrocarbon addiction will be good for Germany, but before the country gets there the cold-turkey period will naturally impact its GDP growth.
This is bullshit propaganda². Did some Lobbyist bought an Article over there? We dont need "breathing room for our energy-intensive industry" we need this lazy fucks to become energy efficient!
The first dominion of the fall of the neoliberalism. Germany has multiple major flaw.
It didn't invest in infrastructure like railways. Poor workers use public transportation what makes good conditions rare and therefore reduce the consumptions. The incomes are too low in the country. People can't afford a basic live and can't consume.
Budgetary rigor. Politics for years, we are looking at you Angela, wanted to spend the less amount of money they could. All of this ended with a lack of money in the system. This also is one factor to the rise of the far-right.
Tax cuts for companies and corporations created wealth for the capital. The capital grew what doesn't help the economy.
dominion? Surely domino? I keep seeing people misspell words, by writing completely different words. Feels like we are getting surrounded by ChatGPT.
It's very irrigating
I used what's called an analogy.
A Dominion was any of several self-governing nations of the British Empire.
What? Thats absolut BS
I'm not familiar with what's happening in Germany, but i do trust apnews. What do you believe is false about the article? Have gas prices gone up in Germany?
Gas prices have gone up, there’s lots of inflation, and I still pay 300€ for a fair quality apartment downtown in a 70k population city. Yes, there’s a pinch, and it might be the world’s worst performing economy this year, but there’s a lot of economic “infrastructure” that supports people here, it certainly doesn’t feel like the US did in 1999 or 2008.
I don’t think the article is necessarily false, but too narrow in scope. They only interviewed a banker and a CEO, both from former West Germany, which is a very different perspective from that of the common man.
Capitalism has cycles. Nothing new.
Germany grew complacent during a “golden decade” of economic growth in 2010-2020 based on reforms under Chancellor Gerhard Schroeder in 2003-2005 that lowered labor costs and increased competitiveness, says Holger Schmieding, chief economist at Berenberg bank.
Gee, who was in power from 2005 until 2020?
Someone who thought that a country with a very low level of debt should not invest money in a time where you actually got money back for taking a credit
Their "debts are evil" stance for 15 years are extremely stupid - even more than the crippling of the roadblocks they put up for renewable
And now people are putting the blame on the current government that had to sweep out all the dust...
Huh news to me.
This is the best summary I could come up with:
Germany risks “deindustrialization” as high energy costs and government inaction on other chronic problems threaten to send new factories and high-paying jobs elsewhere, said Christian Kullmann, CEO of major German chemical company Evonik Industries AG.
From his 21st-floor office in the west German town of Essen, Kullmann points out the symbols of earlier success across the historic Ruhr Valley industrial region: smokestacks from metal plants, giant heaps of waste from now-shuttered coal mines, a massive BP oil refinery and Evonik’s sprawling chemical production facility.
After Russia cut off most of its gas to the European Union, spurring an energy crisis in the 27-nation bloc that had sourced 40% of the fuel from Moscow, the German government asked Evonik to keep its 1960s coal-fired power plant running a few months longer.
These outside shocks have exposed cracks in Germany’s foundation that were ignored during years of success, including lagging use of digital technology in government and business and a lengthy process to get badly needed renewable energy projects approved.
A 10 billion-euro ($10.68 billion) electrical line bringing wind power from the breezier north to industry in the south has faced costly delays from political resistance to unsightly above-ground towers.
Germany grew complacent during a “golden decade” of economic growth in 2010-2020 based on reforms under Chancellor Gerhard Schroeder in 2003-2005 that lowered labor costs and increased competitiveness, says Holger Schmieding, chief economist at Berenberg bank.
The original article contains 1,323 words, the summary contains 234 words. Saved 82%. I'm a bot and I'm open source!
That's easy, Merkel left
Hell no. She left a legacy of Ostpolitik, Nordstream 1 & 2, replacing nuclear power with brown coal power plants and green washing 'natural gas'.
All simply enormous failures.
Can't say Schultz is much better, but then again, that's why we're reading these kinds of articles.
Merkel's policies are part of the reason Germany is slowing down... Particularly her energy policy has been very poor.
Dunno...probably has something to do with their psychotic Russian neighbours lowering property values or something.
Probably because of greentards (shutdown all nuclear reactors, vehicle standards, too much reliance on putin's empire, etc), and maybe the vw scams 😅
Oh yeah, the "greentards" in form of a goverment consisting of CDU/CSU and FDP in the year 2011.
Wenn man keine Ahnung hat, einfach mal Fresse halten.
- low birth rate. Having children is expensive, we have a lack of affordable housing and childcare for families. There should be a major focus to support families, especially academic families. The most successful people don't reproduce, leading to a massive desrease in intelligence.
- mass immigration from Africa and Arab countries which don't contribute a lot to the society but cost a lot of money and bring violence to Germany. The government does nothing against this and the people are unhappy about this, leading to increasing social tensions. Also increasing the housing problem massively
- not enough immigration of actual educated people from Asia or america for example. Germany is becoming more and more unattractive for those people
- too many uneducated people living from welfare. If you have a low paying job you may as well live from welfare. Because pay is a joke. Even for educated people, sometimes it is financially just better to live from welfare then to work in some situations.
- in the light of COVID, a war in Europe, mass immigration and inflation, our politics here do a lot to make life for working people even more expensive, and increase welfare instead of pressuring the people to educate themselves. Green ideology is leading the country to it's grave. Germany thinks it can save the world climate alone by destroying its own industry, and by making everyone poor. No, we don't need heat pumps, at least not RIGHT NOW when everyone is struggling. Cost of everything are increasing, taxes are getting more expensive, health care is more expensive, having a car to get to work is getting more expensive, energy is getting more expensive. You work and almost all the money flows towards those things. Might as well live from welfare where the state pays for energy, housing and gas
- not enough people in STEM, too many people study something that leads to no innovation. Innovation is essential for Germany.
On your 6th point: there are more than enough people in STEM. Just the biggest technical university has over 50k students. And there are plenty of other universities around. The truth is that Germany just doesn't pay enough to have these people actually stay here. That's because you have a bunch of old greedy fucks run the economy. Source: me, an engineer. It's easier to just move abroad or work remotely for a foreign company, or move even to one of the neighbouring countries, and make almost double the salary in the field. France, Denmark, the Netherlands all pay me better than Germany ever did. Germany doesn't innovate because it is owned by old greedy fucks that make it next to impossible to start a company. In the UK it costs under 100 Euros and one hour to register a company. In Germany it costs thousands and A LOT of precious time of your life. I say this as someone who TRIED to start a company in Germany :) This is cultural. Germany has an obsession with being cheap. And it shows.
Anyway, your other points are full of flaws. There are around 4 million people living off of welfare. There are almost 25 million pensioners living off of what you probably don't consider welfare, but in fact is welfare. There's your problem. Not only that, but there are less people that live off of welfare now than ten years ago. The numbers have been going down slightly over the last decades. Also take into account the fact that many of them actually work and need welfare to stay afloat.
There should be a major focus to support families, especially academic families.
How would you go by doing that? What do you propose? Funnily enough, almost all students in Germany come from families with an academic background.
The most successful people don’t reproduce, leading to a massive desrease in intelligence.
This sounds like eugenics already. I see you have a big obsession with "the educated class" here. That is.. interesting to say the least. Your so called "educated class" won't produce your goods, keep that in mind. You need everyone to have a healthy prosperous economy.
Green ideology
I see you speak from a very unbiased position here. What is this said "green ideology"?
Long story short: Germany has always been unattractive to foreigners and will stay so. The only people that ever migrated to Germany did it because they didn't have any other choices. It's the same with the turkish workers that came here half a century ago. Germany treated them like crap, refused to integrate them for many years, even sent their kids to schools to study in Turkish and didn't want them to learn German. It's the same story with arab refugees. It took years for them to get work permits here. The government paid teachers to teach in arabic and refused to teach them German because they feared they would settle here. Many of them have to fight the government to get a work permit and actually be able to contribute to society. This is what the german mentality has to offer.
Older generations aren't ready to accept people from other countries and cultures here. They want quiet, little slaves ready to work for cheap. Even better if they're highly educated. This just feeds back into the german cultural aspect of being cheap. That's why educated people like me work abroad. Germany is mediocre at best. My mates in Eastern Europe make the same as the Germans in my field in Germany. It's hilarious honestly how much they tell themselves how superior they are, but they work on EE wages. Germans expect everyone to flock to their country and learn their language, but Germans can't even order at McDonalds in English when they go abroad. They don't even bother integrating the people that come here, yet they keep saying how they want more skilled, educated immigrants lmao
Look at the people Germany is importing and the conditions they live in. Even people from Eastern Europe get treated like cattle. They get brought here by the corrupt political class to work in meat factories. They barely get any money, they are tricked into living in miserable conditions, they get to sleep in a small room with six other men that are also working in similar conditions. This is how Germany stays afloat. By taking advantage of people and being cheap. This will not work forever. Being cheap and taking advantage of people doesn't work indefinetely. I just find it hilarious how German society has to wake up to that realization now.
I can't say much more other than what you've already said, but I have something to add for the last one. Being Eastern European myself, not being brought to work in Germany, but for working for several German companies inside Eastern Europe, such as ThyssenKrupp and Bosch. It's true they like their workers cheap, obedient, and educated. I can count on one hand how many times they raised the pay from 2019-to 2022, and even then they argued within themselves so it's just the bare minimum wage provided. I could scream into the void about how much more education I had, or what other skills I possessed, or how I did some of my superior's work even, no one cared enough to pay more for it, instead I got a slap in the face reminder with an upper leader's visit, saying how I should just shut up, and be grateful that I could work there, because I could be replaced by a machine anytime soon. If people were sick too much, or they could not endure the constant rotating shifts and 12 hours of standing work, they laid them off instantly, and hired new people. Once the local populace was less and less likely to go there due to working conditions known as the 'meat grinder' and the 'lemon squeezer' then they started hiring foreigners with a temporary place to stay in, like you said often a shoebox with multiple people living inside, which were mostly just shipped containers, with terrible isolation, no heating, or running water. With all of this being said, this is not just slander against Germans specifically, other countries do this too, other corporations do this too. As long as line go up, people are just a resource to be exploited, numbers on a screen for those juicy quarterly reports, so investors can feel good about themselves, and we can all have that nice extra 00.1% GDP growth that will ultimately do nothing for your average citizen.