Bulletin of the Institute for Western Affairs, ed. 557: German economy at a crossroads

Bulletin of the Institute for Western Affairs, ed. 557: Justyna Schulz „German economy at a crossroads”

Hardly a day goes by without the media raising alarms about the troubled state of the German economy, using terms such as "sick”, “hungover”, and “fatigued". In August 2023, The Economist posed the question of whether Germany had once again become the "sick man" of Europe. These concerns are echoed by businesses, research institutes, and international organizations. The International Monetary Fund (IMF) predicts that Germany will be the only advanced economy to experience a drop in GDP in 2024. This raises the question of whether the current weakness in the German economy is merely a temporary issue or if it stems from deeper structural problems that necessitate a fundamental shift in its current developmental model. The former option is supported by the fact that Germany was already labeled the “sick man” of the eurozone in 1999, yet it went on to become the economic powerhouse of the region for decades. Up until 2018, Germany was seen as a major beneficiary of globalization. The latter option, however, is suggested by the growing disparity between the German and U.S. economies, a trend that has been unfavorable to Germany for more than a decade.