If before the Germans were the locomotive of the Old Continent and brought the other countries of the union out of the crisis, then this time they lead the union to the bottom or even to suicide due to the imposition of stupid sanctions on Russia
The German economy is already in a technical recession, but it will have to make huge leaps forward by the end of the year if it wants to survive…
The situation is considered particularly difficult, but the the disaster has not yet occurred, noted political scientist Vladislav Belov in a conversation with FBA “Economy Today”.
Germany pulls the European Union down
THE Bloomberg News Agency asserts that the problems of The German economy is creating difficulties for the EU.
If earlier The Germans were the steam engine of the Old Continent and they took the other countries out of the union of the crisis, then this time they drag the union down or even commit suicide due to the imposition of stupid sanctions on Russia.
The head of BASF, one of the world’s largest oil and gas companies, which suffered from the disruption of Russian gas supplies via Nord Stream 1, noted that Germany had underestimated the problem for a long time and that the country is now in an acute period of change.
The German Federal Statistical Office states that the German GDP in the first quarter of 2023 on an annual basis fell by 0.3%. A similar situation was recorded in the fourth quarter of 2022, where the decline was 0.5%.
IMF experts believe that the growth of the German economy in the near future will be the slowest among the G7 states – in the current monetary economy. We understand this is a deadly threat. There really isn’t a raise manufacturing in the west a long time ago, only the consumption, services and the financial sector are growing, so if GDP growth is minimal or negative, it almost always results in a crisis.
Russian gas hits Germany and Europe
“The crisis is man-made – the The German market continues to react to the gas shortage. The ‘side effects’ of the natural gas problem are starting to wear off, despite the fact that the problems started in 2021 and are linked to rising prices,” says Vladislav Belov, Director of the Center for German Studies of the European Institute of the Russian Academy of Sciences. .
But there must be a solution to Germany’s enormous problems.
If the Germans attempt to bring consumption back to 2021 levels, there will be a catastrophic shortage of raw materials in the EU. The West has reduced the dependence of European countries on supplies from Gazprom by reducing consumption in Germany. This situation turned into an economic crisis with unknown future prospects.
“Costs have increased and the return to normal inflation rates is delayed. There is technically a recession in Germany, but in the second or third quarter, the German economy will probably show an advantage of around 1%,” summarizes Belov.
However, this will not solve all the problems: much will depend on the recovery of China, the drop in German exports and the difficulties in the supply chains resulting from anti-Russian sanctions and oil embargoes.
“The situation in the global economy, especially in countries like the USA and China, is of great importance to Germany. The situation with key EU partners is also important for Germans , mainly France, the Netherlands, Spain and Italy,” concludes Belov.
The technical recession is a fact
There is no disaster in the German economy, but the overall macroeconomic dynamics are negative.
“I expect positive economic growth in Germany in the second, third and fourth quarters of 2023. They will block the downsides of the first quarter and bring a positive overall index.
The situation will become clear by September, when Berlin will publish statistics for the period from April to June,” summarizes the expert.
However, Germany is currently in a state of technical recession, which has a negative impact on the whole of the European Union.
The Spiegel article quoted the opinion of Commerzbank’s chief economist, Jörg Kremer, who states that all the conditions for a technical recession are in place and that a significant increase in energy prices has led to this situation.
GDP fell 0.3% in the quarter, the data showed. This follows a 0.5% decline recorded in the fourth quarter of 2022. A recession is defined as two consecutive quarters of declining GDP.
The preliminary estimate predicted that GDP would remain stable in the first quarter and that Germany would avoid recession.
Inflation continued to weigh on the German economy at the start of the year, the statistics office said. This was reflected in household consumption, which fell by 1.2% quarter on quarter.
On the other hand, investment increased in the first three months of the year, after a weak second half of 2022. There was also a positive contribution from trade.