The German economy is being affected in many ways

According to data from Bloomberg, Germany's recent economy has been affected by industrial production, and the value of industrial output has dropped significantly compared with the previous period. The main reasons are the weakness of heavy industry, the continued decline of machinery production and processing industry, and the huge impact on the automobile manufacturing industry. Among them, Volkswagen, as the most influential company in Germany, is exacerbating the market's pessimistic expectations for the German economy this year. The German Volkswagen Group said it is considering closing domestic factories.

According to data, Germany's industrial production has fallen by 2.4% since July this year, and the economy has also fallen by 0.1%. Germany's industrial output has fallen by 5% compared with last year. Since 2022, electric vehicles have been popular all over the world, and Germany's automotive industry has been significantly affected.

In the first half of 2024, a total of 20 German auto parts suppliers with annual revenues of more than 10 million euros filed for bankruptcy, which had a huge impact on Germany's economy. In order to recover economic losses, the German government issued a policy of "early termination of electric vehicle subsidies" in early 2023. It is this policy that has once again exacerbated the malaise of the German automotive industry.

Without state subsidies, manufacturers cannot enjoy purchase subsidies. Many electric vehicles produced are sold at a higher price than foreign brands in Germany, which leads to a decline in market sales and causes capital investment deficits for most electric vehicle manufacturers and finished parts manufacturers. This move has caused a cycle of economic losses in Germany, which has had a significant impact on the German economy.

According to a recent report released by the German Federal Statistical Office, Germany's GDP fell by 0.3% last year, the first negative growth since the outbreak of the COVID-19 pandemic in 2020. Brand, director of the German Federal Statistical Office, said that Germany's overall economic development was faltering last year. Despite recent improvements, prices at all levels remain high, suppressing economic activity. Germany's inflation rate for the whole year was 5.9% last year, with food prices rising by 12.4% and energy prices rising by 5.3%. The German Federal Ministry of Economics admitted that the economy will continue to be weak at the beginning of this year, and the current data "cannot indicate a rapid recovery of the economy."

German retail sales, exports and industrial production all declined last year. The manufacturing industry, as the pillar of the economy, was hit by multiple blows such as rising energy costs, reduced global demand and rising financing costs. The Organization for Economic Cooperation and Development (OECD) predicts that Germany's economy will grow by 0.6% this year, but it will still be one of the world's worst performing major economies. Germany is the largest economy in the eurozone, and these data do not bode well for the European Union.

At the end of last year, the German Supreme Court banned the use of 60 billion euros of new crown funds for other funding programs, resulting in a huge budget gap for the German government, which made the economic outlook worse. The German government proposed to fill the funding gap by cutting agricultural subsidies and canceling agricultural tax incentives, triggering large-scale farmers' demonstrations. The authorities made some compromises, but failed to quell public anger. The result was that tens of thousands of farmers drove thousands of tractors and trucks into Berlin. Railway workers also launched a new round of strikes, demanding pay increases to cope with the impact of inflation. This round of strikes resulted in the cancellation of about 80% of long-distance transport services across Germany, and regional trains in most federal states were completely suspended.

All this economic loss and recession have re-labeled Germany as the "sick man of Europe." In the late 1990s and early 21st century, Germany lost its competitiveness after the reunification of East and West Germany and was called the "sick man of Europe."

The decline of the German economy is not something that happens overnight. It is worth our attention whether the proud German manufacturing industry will be unable to recover or learn from its mistakes under the impact of new energy vehicles. In short, it is not advisable to reduce the interests of ordinary people in exchange for economic growth by cutting agricultural subsidies and abolishing agricultural taxes. The strikes and demonstrations that have broken out in various places are the best proof of this.