Frankfurt, Germany (AP) – Germany has not seen any significant economic growth in five years. It is a stunning turnaround for the largest economy in Europe, which had expanded exports for a large part of this century and had dominated world trade in developed products such as industrial machines and luxury cars.
So what happened?
Here are five reasons for the continuous economic slump of Germany:
Energy shock from Russia
Moscow’s decision to close the natural gas supplies to Germany after the infringement of the Russian invasion of Ukraine has given a serious blow. For years, Germany’s business model was based on cheap energy allocation of industrial goods for export.
In 2011, the then Chancellor Angela Merkel decided to speed up the end of the use of nuclear energy in Germany, while trusting gas from Russia to bridge the gap while the country left the generation of coal and to renewable energy. Russia was then considered a reliable energy partner; Warnings of the opposite from Poland and the United States were rejected.
When Russia stopped the electricity, prices in Germany shot up for gas and for electricity generated from gas, both important costs for energy-intensive industries such as steel, fertilizer, chemicals and glass. Germany had to turn to liquid natural gas, or LNG, super cooled and imported by ship from Qatar and the US LNG costs more than pipeline gas.
Electricity now costs industrial users in Germany on average 20.3 euros per kilowatt hour, according to a study, the research agency Prognos AG has prepared for the Bavarian Industry Association. In the US and China, where many competitors of German companies are located, the costs are the equivalent of 8.4 euros cents.
Renewable energy sources are not scaled up quickly enough to fill the gap. Homeowner and regional resistance to turbines delayed the growth of the wind energy. Infrastructure to transport hydrogen as a replacement fuel for steel ovens usually stays on the drawing table.
China: From customer to competitor
For years, Germany benefited from the accession of China to the world economy – even if other developed countries lost jobs to China. German companies found a huge new market for industrial machines, chemicals and vehicles. During the beginning of the years 2010, Mercedes-Benz, Volkswagen and BMW Harvested Vetwinsten who sold in what became the largest car market in the world.
At the time, Chinese companies produced items such as furniture and consumer electronics that did not compete with the core strengths of Germany. Then manufacturers in China began to make the same things that Germans did.
Chinese solar panels have wiped out the German makers subsidized by the state. In 2010, the Chinese panel makers were dependent on imported German equipment; Nowadays, the global production of solar panel depends on equipment from China. The government in Beijing has made the efforts to promote and subsidize production for exports. The resulting goods – steel, machines, solar panels, electric vehicles and EV batteries – are now competing with German goods on export markets.
Germany, the most automatic of the economies of the European Union, had the most to lose from China’s export -oriented industrial policy. In 2020, China was not a net exporter of vehicles; By 2024 it exported 5 million a year. Germany’s net export fell by half in the same period, to 1.2 million cars. The Chinese factory capacity is estimated at 50 million vehicles per year, about half of the global demand.
Skimpen on investments
Germany became complacent during De Goede Tijden and explained investing in long -term projects such as railway lines and fast internet. The government balanced its budget and sometimes abandoned the tax revenues of a thriving economy.
Nowadays German commuters shake their heads on trains that do not run on time and constant disturbances of the services while repairs are carried out to worn traces. High speed internet has not yet reached rural areas. A transmission line to bring electricity from the windy north of Germany to factories in the south is years behind and will not be ready before 2028. An important bridge on the highway that connects the Industrial RUHR region with southern Germany in 2021 , 10 years after doubts about sustainability arose. A replacement is not ready for 2027.
The government has fascinated a constitutional amendment from 2009 by limiting the expenses for shortage. Whether the so -called debt brake will come loose will be a thorny issue for the German government installed after the elections of the country on February 23.
Lack of trained employees
German companies have problems finding employees with the right skills, from highly trained IT employees to childcare providers, senior healthcare workers and hotel employees. In a German Chamber of Commerce and Industry among 23,000 companies, 43% of companies said that they could not fulfill open positions. The answer rose to 58% for companies with more than 1,000 employees.
Fewer German students are interested in STEM fields, which means science, technology, engineering and mathematics. An aging population worsens the problem, just like a shortage of affordable childcare, which means that many women work part -time or not at all. Bureaucratic obstacles are an obstacle to the use of high-skill immigrants, although a law adopted by 2020 and is strengthened in 2023 is intended to illuminate the process.
Bureaucracy
Long approval procedures and too much paperwork are a burden on the economy, according to Germany companies and economists. Securing a building permit for a wind turbine can take years. Some other examples, raised among dozens of German business groups:
– Companies that install solar panels must register with both government regulators and their local usefulness, although the usefulness can pass on the information to the government.
– Restaurants must log in with the hand and keep copies of the records for a month, even if the data is stored digitally.
– A law that requires companies to certify that their suppliers obey environmental and labor standards that go beyond the EU requirements, giving German companies a heavier burden than their European competitors.
