Why does the German economy continue to slump after sharply lowering growth expectations?

　　(Financial World) Why does the German economy continue to slump after a sharp reduction in growth expectations?

　　China News Service, Beijing, February 23 (Reporter Liu Liang) The momentum of weak economic growth in Germany continues.

Following the 0.3% year-on-year decline in Germany's gross domestic product (GDP) in 2023, the forecast data recently disclosed by German officials show that the German economy is not very optimistic this year, and growth expectations have been significantly lowered.

　　The 2024 annual economic report recently approved by the German Federal Cabinet shows that Germany's GDP will grow by 0.2% year-on-year in 2024.

Although the data has improved slightly compared with last year, compared with the 1.3% growth expected by the government in October 2023, Germany's economic growth forecast this year is still significantly lowered, and German officials believe that the current pace of Germany's economic recovery from the crisis Slower than expected.

　　Since last year, the sluggish situation of the German economy has attracted attention.

A number of economic data show that the overall performance of the German economy last year was poor. Not only was the economic growth rate in Europe lower than that of other major European economies such as France, Italy, and Spain, but also globally, according to previous predictions by the International Monetary Fund, Germany was It is the only major developed economy whose economy will not grow in 2023.

　　Why does the German economy continue to slump?

Experts interviewed believe that this is not only related to the characteristics of Germany's own economic structure, but also inseparable from the current global political and economic environment.

　　Chen Fengying, former director and researcher of the Institute of World Economics at the China Institute of Contemporary International Relations, said that after the Ukrainian crisis escalated, the sustained high inflation caused by high energy prices was one of the main reasons for dragging down Germany's economic growth.

From the perspective of Germany's industrial structure, manufacturing industries such as automobiles, machinery and chemicals are the backbone of its economy. This means that compared with other major European economies with strong service industries, the German economy is more susceptible to the impact of rising energy prices on industrial production and investment and financing. impact.

　　Affected by the high inflation environment, Germany's overall consumer spending also decreased significantly last year.

At the beginning of this year, data disclosed by the German Federal Statistical Office showed that the final consumption expenditures of German households and governments both declined in 2023. Household consumption expenditures fell by 0.8% year-on-year, and government consumption expenditures fell by 1.7%, the first decline in the past 20 years.

　　"While the mainstream economic growth engine is obviously weak, the relative backwardness in digital infrastructure construction is also restricting Germany's economic development." Chen Fengying said.

　　A report previously disclosed by the European Commission shows that Germany ranks 11th in the overall level of digital infrastructure among EU member states; in terms of enterprise digital technology integration, Germany ranks only 18th.

At the same time, Germany’s digital technology field is also facing the problem of a lack of network talents.

According to statistics from relevant German associations, there are more than 86,000 job vacancies in Germany's information technology field in 2020.

　　"As the locomotive of the European economy, Germany's current digital infrastructure construction has obvious shortcomings, which does not match its economic status." Chen Fengying said that although Germany has been making efforts to deploy digital strategies in recent years to make up for the shortcomings of digital infrastructure, the digital infrastructure Facilities construction does not happen overnight, and compared to other leading economies, Germany still has a long way to go.

　　From the perspective of the external environment, the German economy also faces many challenges.

　　Ding Chun, director of the Center for European Studies at Fudan University, analyzed that Germany is an export-oriented country that mainly relies on manufacturing. However, the current global economy is in a slow recovery process and overseas market demand is sluggish. For a country like Germany that relies heavily on industrial exports, As for the country, the economy is bound to be affected.

In addition, the emergence of a series of geopolitical instability factors such as the Palestinian-Israeli conflict has brought security risks to the global industrial and supply chains, affecting Germany's imports and exports.

The significant decline in German import and export data last year also confirms this.

　　Since the beginning of the year, German media have stated that many economists are pessimistic about Germany’s economic prospects in 2024.

However, Ding Chun admitted that the German economy has not yet reached the pessimistic stage of "debacle".

As the core of the European industrial chain and a major economic power, Germany's comprehensive strength is still there, and it is unlikely to fall into a complete substantive recession.

　　At present, the inflation problem that has plagued Germany this year may be alleviated.

In addition, real wages in Germany are expected to rise in 2024, which will boost domestic consumption growth in Germany.

Ding Chun believes that, unless extreme circumstances occur, the German economy is expected to recover at a low speed this year.

(over)