Germany will be the world's only major economy expected to shrink this year, 2023. The immediate problem is that the loss of Russian natural gas due to the war in Ukraine has dealt a severe blow to its industry through higher energy costs. But that's only really half the problem. But the gas strain exposed longstanding cracks in the economy's foundation: too much bureaucracy and lagging spending on infrastructure. The sudden underperformance by Europe’s largest economy has set off a wave of criticism, handwringing and debate about the way forward. Germany risks "deindustrialization" as high energy costs and government inaction on other chronic problems threaten to send new factories and high-paying jobs elsewhere, said Christian Kullmann, CEO of major German chemical company Evonik Industries AG. A 2011 decision to shut down Germany's remaining nuclear power plants has been questioned amid worries about electricity prices and shortages. Germany went from envy of the world to the worst-performing major developed economy, David McHugh, Associated Press, 9-19-2023 Germany's economy struggles with an energy shock that's exposing longtime flaws | AP News As another smaller factor, I also suspect immigration hasn't been benefiting Germany too much in recent times, but that's another story. Living standards in Germany are lower than what they were in the 1990s. Although the unemployment levels are still low. related older thread: Looks like the standard of living in Germany is going down...
