Global Business: Germany Likely in Recession as It Cuts 2024 Growth Forecast

CGTN’s Sean Callebs spoke to Remi Piet, Senior Partner with Embellie Advisory, for more insight into Germany’s struggling economy. #biz #bizshow #globalbusiness #germany #germanyeconomy

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Germany recently became the world’s third largest economy surpassing Japan last week but it is not all gains the country’s economic economy Minister presented a bleak growth forecast to Parliament on Thursday so why is Europe’s economic Powerhouse flagging Peter Oliver has that story Mercedes-Benz is probably one of the most recognizable German Brands out

There they’ve just posted their 2023 figures while sales were up their C o has urged against overoptimism these are tough times economically in Germany official forecasts have been revised down from a hope of 1.3% growth to a barely perceptible 0.2% veing between stagnation and recession in the past few Financial

Quarters the German economy has struggled to weather Heavy Seas of inflation and geopolitical unees something that economy Minister Robert Haack has termed a perfect storm he says the country needs to change in a changing world the situation is challenging extremely challenging we must do more we must address reforms and booster reforms

In order to strengthen and maintain Germany’s competitiveness in a totally different global environment Germany’s manufacturing industry has been hit especially hard by the loss of cheap Russian gas Imports Alternatives particularly liquefy natural gas from the United States are considerably more expensive the German Central Bank the bundas bank announced earlier this week

That economic output was set to fall again in the first quarter of 2024 making two consecutive quarters of contraction and a recession Mercedes bosses were full of praise for sales of their vehicles from 2023 but they have been Keen to stress that the world faces what they’ve called exceptional

Uncertainty and that could have an effect upon sales in in 2024 the government in Berlin is also worried about the same uncertainty and that’s why they’ve revised down their expectations for the German economy this year as well Peter Oliver cgtn stutgart Germany indeed a lot going on and to

Better understand what is going on with Germany’s economy we’re joined by Remy pet he has a senior partner with Elli advisory Remy always great to have you on our program I certainly appreciate it U let’s kind of get right to it Germany’s Central Bank says the country

Is likely already in recession okay what does that mean to the folks in Germany the day-to-day lives of uh people in Germany what sectors are struggling and kind of compare and contrast this the same time the country surpasses Japan to become the third largest economy in the world they get hammered with this

Economic news that’s a very good question John I mean and and the situation is more complex than it seems in full of contradiction on the one side you have structural reasons for the fact that the German economy is forecast for 2024 been devis down the main three sector of the

Economy whether engineering automative or chemical are are in you know export driven sectors that suffer from a slish global demands and that actually you know provides some some worries to to the economy and there’s a lack of trust from the from the population towards you know immediate future but at the same

Time when you actually look much more in detail you see that unemployment has never been so low in Germany and and there’s you know the success of of fighting against inflation latest numbers were 2.8% has led to you know some some you know real shuring news in

Terms of the capacity of the German economy to remain strong and as you said you know was still within top three or top four economies when you looking at Japan in the world so the question here is more a crisis of trust and vision towards you know the capacity of the

Economic system to tackle the changes of the global economy energy transition you know capacity to bring skilled workers because there shortage of skilled workers in Germany and that’s where you know the real concern lies but there are some strong factors still in the German economy that will improve his

Resilience so explain why Germany’s economy is so important so crucial to the health of Europe’s economy as a whole well it is the strongest you know European economy it does you know relatively affir better than for example the the UK which is outside of the of

The EU now but is definitely in in recession that as proven by the latest numbers there is you know obviously France is the second largest domestic European economy and and is boosting actually you know better results than than than than Germany over the last few few months and years but you this engine

Built on France and Germany has always been the basis of the European Union and there are you know the structural factors to security of supplies in in different sectors the capacity to you know jump on the you know capacity to secure you know critical minerals and and the TOs energy transition economies

That has been seen and and lead to some you know weakening of of the German economy specifically but more generally the European Union that fears you know some security of supplies on the energy front and and and creco minerals you know also its geographical proximity in Europe has something to do with this

Let’s talk about the ongoing impact of the Ukraine Russia conflict on Germany’s economy well it does have a an impact especially on the the structure and fundamentals of the German economy that was you know usually you know built towards potentially receiving cheap gas from Russia and the you know

Geopolitical positioning of the European Union towards Russia and the current conflict you know following the invasion of Ukraine by by by Moscow has led to the fact that the German economy is not as you know competitive internationally they could have been with that you know additional source of of of Supply uh

There’s been a strengthening of of of incentive towards you know bringing new renewable energy uh new new capacities of of domestic production uh the German economy is suffering from the decision to move away from nuclear energy as opposed to France for example and that is you know some some decision that

Provide that fail the capacity to provide some cheap energy for very strong and energy intensive manufacturing sector in Germany so there are some some elements on the geopolitical side on the question of the energy mix for the for the productive system in Germany that are linked to the

Current conflicts in the in the region obviously so what cards does the German leadership have what are the next steps from the for the German government to boost its economy so I mean there’s decision from the theal government unfortunately is one of the most unpopular in in German

History for the last you know few months there’s capacity and to encourage for additional let’s say investment through a specific fund for infrastructure specifically that’s one element of being able to to to build towards the future there’s potential incentive for consumption because as I was saying you

Know the latest figures show that the capacity and purchasing powers of the average German has actually improved over the last quarter so there’s actually a lack of trust and lck of capacity for domestic consumption so some on a very short term be like you know consumption incentives for for for

The domestic Market but in the longer run you need to have like a clear strategy towards where is the German industry going and what would be the main focus of investment of the government and there’s been so much dissensions and disagreement within that Coalition in power three main three

Parties line not having clear a strong majority in in in in power that hasn’t allowed to have some Clear Choice in terms of I was saying structural decisions such energy supplies for example joans interesting let’s talk about a problem that has plagued so many nations from Spain uh to Poland to gree

To India and that’s the farmers uh what’s about the protest there there are now some 10 EU Nations joining forces to protest at border crossings tell us more about the EU agriculture policies at the center of this movement so this is a mix of of different factors

That impact the position of the of of the farmers across the continent uh there’s been additional you know uh uh intensification of of environmental or or you know regulations inside Europe main for the you know public health and and quality products but are actually much more costly to produce as opposed

To International let’s say Imports of of produce from outside there been strong margins from the distribution distribution and large retail stores that has actually you know increased prices and at the expense of both the producers and the consumers and that has led to discent of of the farmers that

Have to fire also some decision towards you know stepping down on on the on the use of chemicals for example so all this has LED and being somewhat you know politically motivated from the extreme right has led to some apprising different parts of of the U of Europe

And has made some headlines indeed yeah indeed a multi-prong concern there Remy pet always a pleasure thank you so much for your Insight