Germany’s industrial has been on the decline since 2018.
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It will be interesting to see the effect that this had inside the EU. Germany has been one of the main contributors to the EU coffers for some time.
When I was in Russia about seven years ago German cars were to be seen everywhere.
More on Germany’s plight:
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Nah
Germany is just being screwed over by supply-side economics. Their turn to take one for the team.
A military buildup at least would be an industry they can support.
The oil shock of 1979 by OPEC…but hold on…today we are the number one exporter. Oil shock? Just our turn to be porked.
Imagine some folks want to see us porked now.
Germany does not need to be self-sufficient in NG or oil. Instead they are a debtor nation. Just like us. Nothing to do with the poor getting benefits. A lot to do with the rich wanting tax cuts.
2018 German tax cuts, an almost complete death to the German economy. Why not? The people love it.
From 2017, 2018, and 2019 the US has sub par for the ignorant real GDP growth.
There are a variety of definitions of supply side economics but having done business and traveled in Germany I don’t think that this is quite the correct definition of their economy. Generally supply side economics means lower regulation and taxes. Germany is neither of these.
Germany’s economy was heavily skewed to engineering (cars), iron, steel and chemicals. All powered by cheap energy from Russia. All can be described as ‘old’ industries. One of its biggest export markets was China where it sold goods worth $100 billion a year. It’s all started to go wrong:
The EU and China are on the verge of a trade war that started over tariffs on EV:
Additionally German car manufacturers were investing massively in EV production that is now stalling. VW is an example of this:
So there are a lot of things that have gone wrong all at once for Germany
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Output in Europe’s biggest economy contracted by 0.1 percent compared with the previous three months, federal statistics office Destatis said, after expanding by 0.2 percent in the first quarter…
The April-to-June period noticeably saw declining investment in equipment and construction, Destatis said. “The German economy is stuck in crisis,” said Klaus Wohlrabe, head of surveys at Ifo economic institute, citing persistent weakness in manufacturing and sluggish private consumption. “Hardly any improvement is to be expected in the third quarter of 2024 either,” he added.
But in further worrying news, German inflation edged up in July to 2.3% year-on-year from 2.2% a month earlier, according to Destatis, despite analyst expectations that it would remain unchanged.
“Of course, Germany’s export-orientated industry is more exposed to the weakness of the Chinese economy, for example, but many of the problems are homemade,” he added.
A shortage of skilled labourers, burdensome red tape, a costly green energy transition and years of under-investment in infrastructure are all adding to Germany’s woes.
DB2
Interestingly, 2018 is about the time when the number Germans over 60 surpassed the number younger than 30.
No nation that I know of has been able to consistently grow their economy when their work force is declining and retirees increasing as a percentage of the population. Japan, China, and Germany are three of the greatest economic powers of our generation and all are in decline because of demographics.
When a nation’s population ages, domestic demand stagnates, leaving only exports as a way to grow the economy. But when most of the world is facing the same demographic problem, who will buy those exports?
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Not all bad news from Germany:
Germany’s machine tool industry clinched the global top spot in 2023, surpassing China and Japan with a surge in international sales. Spearheaded by robust growth in the American market, particularly the US and Mexico, the industry witnessed an uptick in exports to America.
Last year, the German machine tool industry sold machines worth 9.5 billion euros abroad, including parts and accessories. This was a nine percent increase from 2022. “This means we have defended our title as world champion ahead of China and Japan,” says Dr. Markus Heering, Executive Director of the VDW (German Machine Tool Builders’ Association), Frankfurt am Main, commenting on the result.
Within the triad of Europe, America and Asia, exports to America grew the fastest, increasing by 18 percent. This was driven primarily by the US, the second largest sales market overall for the Germans, accounting for a share of 15 percent. The US purchased machines to the value of 1.4 billion euros. This represents an increase of 19 percent. “Our members are feeling positive about current and future developments in the US market,” reports Heering. “US customers have lower costs than their German counterparts as a result of the lower energy prices there. Furthermore, the automotive industry is currently investing in heavy-duty engines before stricter emissions regulations come into force in 2027. Mexico is also performing strongly. Many international companies are investing there because of the country’s proximity to the US market,” Heering continues.
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9.5 / 4072.2 = 0.24% of the German economy. Not bad news, but also not particularly meaningful overall.
Yep America did that for decades with China selling to them machine tools. Why not? After all Germany is an industrial power based on those tools. American and Mexico have demand-side economics. We are tooling up.
@Divitias Supply and demand graphs have nothing to do with supply side or demand side economics. Some writers of ill repute may mess around for political reasons these days. The supply side guys are losing power. Screwing around with the messaging is common.
Demand side economics is a partnership between means of production and workers. The government sets policies to enrich the nation.
Supply-side economics is capital centric but sees a decline in production and the national wealth.
Which countries have which rotates slowly over decades.
It is critical to have a good sense of this when investing.
Germany is doing very well being in 3rd place after USA and China.
Countries with the largest gross domestic product (GDP) 2024 | Statista.
GDP per capita is quite interesting:
In today’s world I’m not too sure of GDP figures - see this article on Ireland:
Ireland’s GDP per capita is great because they are a small country with lots of US investments in manufacturing.
I suppose it all depends on how you define “doing very well”.
Ten year growth in GDP:
Germany - 18.05%
USA - 63.99%
India - 93.18%
It is quite likely that sometime over the next 5 or 10 years, India supplants Germany as 3rd place in the world.
It’s not just investments in manufacturing, it’s also various types of financial pass through companies that add to the number. It’s a tough thing to measure properly in certain places (Cayman Islands, Liechtenstein, Ireland, Iceland, etc).
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The Irish have the take home pay to prove things are great in Ireland.
Where is your link to these nmbers?
Google. I used google very quickly and I did the simple percentage calculations in a small spreadsheet. The whole thing took perhaps 90 seconds.
Here’s where I got the 2014 number for example - Germany GDP 1960-2024 | MacroTrends
And here’s a screenshot of the tiny spreadsheet I used for calculation (luckily it’s still on my screen and I didn’t delete it yet!)
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