Robert Habeck sees Germany's economy in "difficult waters"

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Economics Minister Habeck: “We are emerging from the crisis more slowly than hoped”

Photo: Liesa Johannssen / REUTERS

According to the government's assessment, the German economy is in difficult waters. “We are emerging from the crisis more slowly than hoped,” said Economics Minister Robert Habeck in Berlin. The traffic light coalition made up of the SPD, Greens and FDP has significantly reduced its growth forecast for this year from 1.3 percent to just 0.2 percent. “The global economic environment is unstable and global trade growth is historically low, which is a challenge for an export nation like Germany,” said Habeck.

The increased interest rates to combat high inflation would also leave their mark. “We are seeing declines especially in the construction industry.” Germany also has structural problems. "What we need now is a reform booster."

At the same time, the Vice Chancellor admitted that the traffic light government was partly responsible for Germany's economic problems. "A lot of decisions were made with a lot of volume," he said, referring to the many disputes in the coalition of SPD, Greens and FDP. Because of the differences, the government has lost massive amounts of trust among the population in many surveys.

Incentive for older people, integration of refugees into the labor market

The biggest challenge for Germany is the labor shortage, according to Green Party politician Habeck. "It will worsen in the next few years and dampen potential growth." Women should be given better opportunities to work more. There also needs to be incentives for older people to voluntarily work longer. Refugees also need to be better integrated into the labor market.

Habeck also referred to the almost two-year war in Ukraine, which is further putting a strain on the German economy. After the attack on Ukraine, Russian President Vladimir Putin wanted to push Germany into an energy crisis. “The energy supply is secure and energy prices have fallen significantly again,” says Habeck. “Inflation has been tamed.” There are wage increases above the inflation rate again. There are also signs of hope due to record numbers of employment and the expansion of renewable energies.

However, there are different ideas about additional relief within the traffic light parties. Habeck had proposed a billion-dollar, debt-financed special fund - the FDP rejects this. A growth package that has already been approved by the Bundestag is in danger of failing due to resistance from the Union. The Mediation Committee of the Federal Council and Bundestag will meet on Wednesday evening.

Meanwhile, Finance Minister Christian Lindner has again campaigned for the controversial Growth Opportunities Act in the Bundestag. Germany's competitiveness has become increasingly worse over the past ten years. "And that's why the point has now come where we need an economic turnaround," said the FDP politician. He answered a question from a member of parliament that he would be happy to talk to the Union about corporate tax reform. "So that you can make this demand credibly, the Union should start by agreeing to the Growth Opportunities Act."

eru/Reuters