What Happened to the German Economy? | German Economy | Econ

For a while, Germany experienced the longest period of uninterrupted growth. The German economy thrived on high-quality manufacturing and export-oriented policies, establishing itself as a manufacturing powerhouse. Notably, exports accounted for 47% of the country's GDP, a significantly higher proportion compared to large economies like the US, China, India, and the UK. In 2015, Germany's trade surplus amounted to approximately $255 billion, equating to nearly 7.5 percent of its GDP.

However, the German economy has since slowed down and now lags behind the US and most of Europe, with its growth rate continually decreasing. While it is easy to blame Germany's economic problems solely on the energy crisis caused by the war in Ukraine , the truth is that the country already possessed significant weaknesses before the crisis. The invasion of Ukraine has exposed Germany's dependence on cheap Russian energy, exacerbating its longstanding economic challenges.

So, what exactly happened to the German economy?

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#economics #germany #recession

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[econYT]

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[Riggsnic_co]

Inflation hits people a lot harder than a crashing stock or housing market as it directly affects people's cost of living that people immediately feel the impact of. It's not surprising negative market sentiment is so high now. We really need help to survive in this Economy.

[ralfm-mgoo]

It amazes me greatly the way I move from an average lifestyle to earning over 63k per month, utter shock is the word. I have understood a lot in the past few years to doubt that oppor-tunities abound in the financial markets, The only thing is to know where to focus....Thanks so much Rahul Sahil Gupta....

[nicolasbenson]

I am trying to avoid making any new buys at this point in other not to get sucked into a bear market trap.It's tough making money in stocks when institutional investors are the driving force behind the selling.. although I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?

[ViolentCabbage-ymko]

The biggest reason is energy. Without cheap Russian gas, the German industry have to fork out more money for energy which is then passed on to the consumers. This inflates the prices making it difficult to compete internationally as countries have cheaper access to energy such as India and China

[TheOzelot]

In a nutshell:

1. dependence on gas imports and a homemade energy crisis
2. demographic decline causing a shortage of skilled workers in a lot of important fields
3. failing to attract (high skilled) immigrants with way too much bureaucracy, high income tax, language barrier etc. to solve demographic change
4. general dependence on exports and global value chains (this is the biggest problem right now, as trade restrictions will only become worse)
5. not being a country where businesses can be easily set up (e.g. lots of bureaucracy for businesses, high taxes and not a lot of risk capital)
6. a foreign policy which often times misses German interests or only looks at interests of very few big businesses such as VW

[donaldwayne]

The market's direction can swiftly change, with indexes frequently transitioning from a bear market to a bull market precisely when the news is most negative and investor sentiment reaches its lowest point.

[charliehunnam]

The media is currently barraged with a lot of economic data right now. It takes a lot to see beyond the whole ocean of news on focus on what is important, which is that no matter how low stocks go, they always bounce back. I really ignore all the news and keep investing. I recently allocated about $121k to put in the market as we anticipate a crash. Any recommendations?

[cristianzaharescu]

Germany needs to stop following WEF policies!

[MarkFarrington-hbne]

It's simple, Joe said to serf Scholtz "destroy your country's economy" and Serf Schultz BareBack and the other WEF appointed minister did just that

[wise_lynx]

Germany is not as innovative as it used to be. And in the automobile industry, other countries have now caught up and surpassed Germany and the result is that demand for their cars has fallen dramatically.

[fv]

In my opinion, two important points that have not been addressed enough are the extremely high taxes and the bureaucracy. The high taxes make it unattractive to invest in Germany. In addition, the slow bureaucracy in Germany slows down everything, which also makes Germany unattractive. It will only get worse in the future, we are just living off the rest of the prosperity that was created in the 70s and 80s.

[mandalorian]

I just moved to Germany after Living in India and China. Here are my thoughts 1. Almost little to no digitalisation. Tonnes of jobs that can be replaced by digitalisation and the manpower can be utilised in industrial, IT and other sectors.
2. Crazy taxes, i pay 40% tax which is making me leave Germany asap. Wages are crazy low compared to new inflation. It makes Germany less interested for skilled workers to move here compared to US and Singapore.
3. New companies easily get in the comfort zone and don't want to expand their services overseas.
4. Lack of infrastructure and local government support for new startups.

[michellebarnett]

I appreciate the knowledge you've provided. But this administration has putting so many families into difficult situations, I pray for our country, we need compassion for the American my country.

[eliasx]

As a German, this should be presented to our politicans.

[lmaoxd]

An Austrian with ambition: My time have come.

[evitainvictusperone]

No more cheap gas and energy which is essential for a strong industry, inflation and reduction of production as a consequence. That's what happened.

[CG-yqxy]

What happened to the German Economy? That is a _very_ long and tedious story, elements of which are both well known and unknown. As someone from the European side of the pond, I'll do my best to explain what happened to Germany's (and by extension the rest of the EU's) economy starting with the most obvious:

*Energy:* Yes, we all know this one with Russia, Ukraine, the pipelines etc. However there is more nuance to this matter. Prior to the events unfolding, both Germany (and the EU through the commission) went out of their way to decommission/reduce the operations of all of their natural gas storage units, either located in Italy, Spain, Greece and (when it still was part of the EU) the UK too. Especially during the pandemic, Germany and the rest of the EU went out of their way to reduce the personnel that worked in the LNG terminals, with said people having a unique set of skills and certifications to handle the hazardous materials. Meanwhile Germany, in a 200 IQ moment, went on to close down it's nuclear stations; mind you Germany is a country with little to no known earthquakes. Meanwhile, while other countries have gone out of there way to either explore new sites (Guyana, Iran, Saudi Arabia) or reactivate old ones (USA) to deal with the energy crisis, both German and the EU government would prefer to buy spot prices with the rising shipping costs. And mind you, there have been studies in the Mediterranean, North Sea and off the coasts of France and the Netherlands that have shown proven significant reserves, negating the idea that Europe is a resource poor region. Unless you are either Cyprus or Norway, any suggestion of opening up new fields in the EU will get you drummed out of the offices of power. This however bakes in the energy inflation in all German and EU related products making them uncompetitive, with the brunt of it being bared by the agriculture sector. It is no wonder then why EU governments (looking at you Netherlands), are trying to permanently remove farming from the equation.

*Population:* It is no secret that both Germany and the rest of the EU are demographically declining. Many videos have been made about this and the effects (both positive and negative) that immigration has had in the German and Northern European Markets. However, the issues of migration only show half of the problem. True, there is an undocumented immigrant situation, where many do indeed (some for the better and others for the worse) get fast tracked to permanent residency. These groups need to be brought up to the standards required of the domestic market, which may take sometimes up to years and taxpayer money (assuming that they do successfully integrate). But the real fun begins if you're a skilled non-EU worker (Turkey, Lebanon, South Africa and even USA). If you fall under this category, expect to go through the German bureaucratic ringer for possibly everything and on top of that become extremely fluent in the German language. For skilled labour, the German system can become so stringent, that it's easier to stay if you're a refugee than an actual applicant seeking to work in Germany. Thus one sees many Middle Eastern/muslim doctors prefer positions in the UAE/Bahrain and Americans staying put on their shores. EU skilled labour doesn't have it much better, for while they can circumvent the German bureaucracy to extent, they (especially the southern Europeans) will hit the 'sauerkraut ceiling' of German corporate culture and thus will either seek opportunities in other EU countries or look to the US, Canada, Australia and even Singapore for better opportunities. This ensures the demographic decline and the work output one sees.

*Innovation:* As the video perfectly stated, while the German economy does have breakthroughs, they are mostly focused on traditional manufacturing industries like the automotive one. However, the US, China and many other competing nations are putting their time and resources in semiconductor and other electronic industries which, while expensive and often riddled with failure/fraud, have also often produced some cutting edge companies and innovations. The US has the FAANGs, starlink, Tesla and a whole semiconductor design industry to show while China has BYD, Huawei, YMTC etc. that closely follow. Meanwhile any German/EU tech company that has the potential for greatness gets stifled by a bureaucracy that doesn't want to see the established corporations loose weight, and a system that has been sitting on it's laurels thinking that it's still 2005. Therefore, any European startup tech company that shows any potential, immediately starts looking for the exit once it reaches a certain size often ending up in the US or in Singapore. Meanwhile the EU countries are starting to see their markets being penetrated and out-competed by Chinese and South Korean products while the most entrepreneurial Germans/Europeans are creating more jobs in the USA.

This is a brief synopsis and I'm sure that I've missed some items. But this should cover the basics at the very least.

[SergioK]

“To be an enemy of America can be dangerous, but to be a friend is fatal.”
— Henry Kissinger

[edenadam]

I've been living in germany for 2 years now, and I was shocked how the country is far away from the image that we used to have about it as the 1st economic power of Europe
Public transport, health care, administration, network... many fields remain undeveloped
It looks like germany stuck in the 2000

Now that they made Russia as an enemy and closed all their nuclear reactors, I don't think that the future will be bright again for germany