Germany has been deemed the driving force of the European economy for many years. However, analysts see signs of slowing down. It makes them extremely worried about the economic prospects of the fourth-largest economy.
Germany has always helped all eurozone countries cope with difficulties. However, now its economy is on the verge of crisis. The problems have been mounting for the first two quarters of 2023.
According to Bloomberg analysts, the German economy is losing steam which may adversely affect the euro area.
"Decades of flawed energy policy, the demise of combustion-engine cars, and a sluggish transition to new technologies are posing a threat to the economy. We’ve been naive as a society because everything seems fine. These problems we have in Germany are accumulating. We have a period of change ahead of us; I don’t know if everyone realizes this," Martin Brudermüller, the CEO of BASF, said.
For several years, Germany has successfully tackled different problems. However, the country needs to develop a strategy to overcome the crisis. Bloomberg analysts predict that Germany could lag behind other European countries "for many years." International Monetary Fund (IMF) made a similar prediction. The Fund expects Germany's GDP growth to be the slowest among the G7 countries in 2023.
On May 25, the German Federal Statistical Office reported that in the first quarter of this year, the country's GDP decreased by 0.3% compared to the same period in 2022. A contraction for two consecutive quarters indicates a looming recession.
Despite the current difficulties, German Chancellor Olaf Scholz is optimistic about the prospects of the national economy. He assumes that its economic potential is still high and it will eventually get back on track.
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