![]() ![]() Looking back on recent events, however, one can’t help but wonder: was this just the result of a series of unfortunate events and, some would say, Germany’s pandering to Russia and myopic obsessions for exports, which left the country extremely vulnerable to external shock? Is Germany just a collateral victim of the United States’ proxy war against Russia? Or could Germany have been a target of economic warfare itself? ![]() Two of the main pillars of Germany’s economic success in the 21st century - cheap imports of raw materials and energy (especially from Russia), and high demand in the rest of the world - have been pulled from under the country’s feet, and they aren’t likely to come back any time soon. In light of the above, it’s easy to understand why the German chancellor Olaf Scholz warned of an extended crisis, one that “won’t pass in a few months”. Weighed down by rocketing energy prices, nearly one in six industrial firms in Germany are now reducing or abandoning production. Then came the Ukraine conflict and the stream of Western sanctions, which have sent the price of gas (and other raw materials) soaring and further destabilised supply chains. The pandemic also lowered growth in key Asian export markets - first and foremost China. First it was battered by the global lockdowns of 20, which disrupted global supply chains, forcing German industries to pay more for increasingly scarce components that they once bought from China. The German economic machine has broken down. This is a very tough pill to swallow for a country where export-led growth is more than just an economic model - it’s part of its national identity.īut those days are over. But even more traumatic for the country is the fact that Germany is now running a negative trade balance - the first time this has happened in more than 30 years. ![]() Given Germany’s deep-seated inflation-phobia, all this is problematic enough. Once hailed as Europe’s economic powerhouse, Germany is now being labelled its “weakest link”.Ī recession next year is now considered almost certain industrial production is down 9% on last year inflation has soared to double digits for the first time since the Second World War. All of Europe is suffering as a result of the energy crisis, but for the continent’s largest economy, this is more than just an economic crisis - it’s an existential one. ![]()
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