“Stagnation crisis”
The mood in the German economy is bad
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The interest sinks, wages rise – that sounds good. But the economy in Germany does not start. What's going on there?
At a good party, even more good mood is created. That happens, or it just doesn't happen. Why is that? Nobody knows exactly. The mood in the German economy develops quite similarly. And it is just as dreary as it hasn't been for a long time.
The condition is traditionally measured with the IFO business climate index. For them, around 9,000 companies are asked every month how they are doing and what they expect for the next six months. The current result of this week is: 86.6. Translated into words, this means that nothing works here. It wasn't that bad since February. And whether it gets better? Rather not.
The companies that sell investment goods are the loudest. This in turn is particularly bad. Because if these companies are in a good mood, they often spread throughout the economy – where machines are bought, more can be produced in the future and growth will arise. Clemens Fuest, the head of the Munich IFO Institute, says: “The German economy is getting deeper and deeper into this stagnation crisis.”
Consumers, whose income are increasing vigorously, do not really help – because they keep their money together for fear of difficult times. There could only be the demand for German goods abroad. In fact, despite all the tensions and crises, the global economy is not bad. The global economy will grow around three percent this year.
Dark forecast
Unfortunately, almost nothing comes in Germany. Because the Germans build great cars with petrol and diesel engines, for example, but are not necessarily the world market leader in electromobility- which is becoming increasingly important. The bottom line remains: there is no crash, but there is also nothing going on.
The figures for the second quarter of 2024, which the Federal Statistical Office has announced, show this. After that, the economy shrank very slightly by 0.1 percent compared to the same months of last year. Now you could say: so what? Last year we didn't feel bad either. That's right, but the question is whether it stays the case in the long run if we shrink or at least do not grow, while almost everyone else increases.
The International Monetary Fund saw Germany again last month in its economic forecast as the bottom of all major industrialized nations. This also has to do with the fact that high energy prices hit us particularly hard. And with the fact that Germany as an export -oriented country always suffers when it stops in world trade because tariffs are levied or delivery chains do not work as usual.
But it also has to do with Germany itself. More confidence is not everything. But it would help if the mood rises so far that companies get courage to invest and buy consumers.
This text first appeared at stern.de
