Germany in recession: what Europe's press is saying
Germany is facing hard times: in its latest forecast the International Monetary Fund predicts that the country's economy will shrink by 0.3 percent in 2023. While other states in the Eurozone are at least registering slight growth, Germany takes last place among the economies included in the analysis. Europe's press takes a worried look at the reasons for the negative trend.
Skilled labour shortages and red tape
ABC voices concern:
“The role model of an industrial economy that Germany once was has lost credibility. The drop in production in June (1.5 percent) was three times as high as expected, with the powerful car industry slumping by 3.5 percent. ... 'This is the beginning of deindustrialisation,' warned one of the country's most respected economic institutes. ... The origin of the crisis is the rising energy costs, which are a major factor in industrial decisions and are causing companies to relocate to find more competitive production sites. The lack of skilled labour and the bureaucratic and regulatory excesses are two other reasons which explain the crisis.”
The country rested on its laurels for too long
For the Kleine Zeitung, the economic crisis is the result of the complacency that marked the Merkel years:
“Cheap energy plus low wages and strong exports = prosperity - the classic formula for success in the economic miracle country no longer works. ... Germany rested on its successes under Merkel. The country let itself be celebrated for its 'black zero' policy and budget surpluses. Investments in the future were neglected. The dilapidated infrastructure of the roads and railway lines is just one indication of this. And now Finance Minister Christian Lindner is cutting the budget in times of a weakening economy and falling taxes - cutting back on digitalisation, of all things. Germany is in a bad way.”
Headed for a hard landing
The population will still feel the recession, warns the Neue Zürcher Zeitung:
“Germany is basically stuck in the worst of all worlds right now: stagflation. Its economy has been shrinking or stagnating since the fourth quarter of last year. At the same time, its inflation remains far too high, at an annualised 6.5 percent according to the latest figures. But while in such a situation the population feels the pinch with job losses and harsh real wage cuts, most Germans haven't really noticed much of this so far. ... What must be worrying, however, is that there are some indications that the pain of the economic braking manoeuvre will simply be felt with more of a delay this time.”
Use the doomsaying as a wake-up call
The situation is not as bleak as some are making it out to be, writes the Frankfurter Allgemeine Zeitung:
“Yes, Germany is in a serious recession. ... But collapse is not imminent and the call for crisis summits in the Chancellery does not testify to a deeper understanding of the economy. The good news is that the German economy also has growth potential. True, this is smaller than it used to be, but it exists. ... Of course this does not mean that the government can sit back and relax. ... Reforms such as the Skilled Immigration Act or the Planning Acceleration Act, which has still not been passed, are too half-hearted. ... If the wailing about a crisis serves as a wake-up call, then at least all the daily alerts will have a silver lining.”
ECB hindering growth
Neatkarīgā sees a key factor behind the weak growth data in Europe:
“Voices are growing in the Eurozone against the ECB's dramatic interest rate hike policy which is slowing down the European economy while not really helping to fight inflation. In Latvia, however, it can be observed that thanks to the vast majority of loans being linked to the Eurozone's interbank Euribor rates, which in turn are based on the ECB's base rate, the commercial banks are seeing strong growth in their profits, which officially increases the GDP. However, the rest of the economy is faltering due to a significant increase in the price of loans.”