Germany’s economy is shrinking but not 'Europe’s patient’ –

In its summer forecast the commission once again cut its growth forecast for Germany, down 0.4%, the worst economic performance among the EU’s six largest economies, but Economy Commissioner Paolo Gentiloni insists the country has all the tools it needs to recover.

The Commission previously predicted that Germany would be among the slowest growing European economies with growth of 0.2% in 2023. However, it has now updated its forecast, expecting the economy to contract by 0.4%.

„There is a clear recognition of the depressed economic situation in Germany with negative growth in our forecast,” Gentiloni told reporters as he presented the Commission’s economic summer forecast.

However, he said Germany was „a strong economy with the tools and potential to recover”, so the Commission would not accept the term „the sick man of Europe”.

Economist Echoing what the paper said in 1999 when the country’s economy was struggling with low growth, its cover story in August questioned whether Germany was the patient of Europe.

„Such reports are an incentive for me to show Germany’s potential,” Finance Minister Christian Lindner, co-leader of the pro-market FDP, said in a recent conversation with foreign reporters, admitting that the country sometimes „tends to be handcuffed.” .

He argued that Germany had to deal with issues such as bureaucracy, the state of infrastructure and a shortage of skilled labor, while other intervening factors were outside its control, including the economic situation in China, Germany’s largest trading partner.

Meanwhile, the commission pointed to Russia’s invasion of Ukraine as a major problem for Germany’s energy-intensive industries, which previously benefited from cheap natural gas imports from Russia.

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„Even after that [the energy price shock following Russia’s war of aggression] „Energy price levels have declined relative to manufacturing locations elsewhere,” the report said of weak business confidence.

A number of research firms have also recently cut their forecasts, including the Kiel Institute for the World Economy (IfW) last week and the German Institute for Economic Research (DIW) in June.

However, the commission expects German growth to rebound next year, forecasting a 1.1% expansion, which would overtake Italy and the Netherlands.

(Nick Alipour |

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