According to the expectations for this year, the German economy is expected to contract. It is anticipated that Germany will be the sole economy within the Eurozone to experience contraction. Inflation is also more pronounced in Germany compared to its other European neighbors.
CNN's report includes the following statements:
"It has been almost twenty years since Germany shed the label of the 'sick man of Europe,' thanks to a series of labor market reforms heralding years of economic performance. Unfortunately, for Berlin, this label is making a comeback."
Sticky inflation and production that has declined or stagnated for three consecutive quarters have placed significant strain on Europe's largest economy.
In fact, the International Monetary Fund expects the country to be the only advanced economy to contract this year.
A contraction of 0.3% is predicted for the 20 countries using the euro currency, in contrast to an average increase of 0.9%, including Germany.
A prolonged slump would be a disappointing outcome for an economy that averaged around 2% growth annually over the decade following the 2008-9 financial crisis, often running budget surpluses and experiencing an export boom.
According to Stefan Kooths, Director of the Kiehl Institute for the World Economy, Germany is suffering from "a series of individual issues" rather than a single major ailment.
The broader industrial sector in Germany, which includes renowned manufacturers like Volkswagen and Siemens, has also taken a hit. Official estimates show that industrial production contracted by 1.7% year-on-year in June.
According to data released by S&P Global on Wednesday, commercial activity in Germany, encompassing both services and manufacturing, experienced its steepest decline since May 2020 when the country gradually began lifting strict pandemic restrictions.
Carsten Brzeski, Global Head of Macroeconomic Research at ING, told CNN, "Germany's industrial order books have emptied over the last 12 months."
He added, "Germany's exports to China are sluggish, significantly lower compared to pre-pandemic times."
