2023-08-17 12:49:37
Is Germany the “sick man of Europe” again? This term has been haunting the debate for weeks. In fact, there is cause for concern. Germany is the only country of any significant size that is on the cards for a recession this year. In addition, there is a shortage of workers, high energy costs, excessive regulation and economic policy mistakes over the past twelve years, which are weakening growth potential. But the diagnosis of the “sick man” is far exaggerated. So far, Germany has at most slipped from its former top position to midfield in the long-term Europa League.
The pessimists who loudly lament the decline of Germany today often make two mistakes. First, they confuse the short-term contraction in activity, driven by external shocks and weak demand for goods in world markets, with the long-term trend growth resulting from domestic supply conditions. The German economy, which is particularly dependent on exports, will – as usual – soon pick up again, at the latest when the inventory correction in the global manufacturing sector ends in spring 2024.
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