Germany's Economic Slump: 5 Key Reasons
1. Energy Shock from Russia
* Moscow's gas supply cutoff severely impacted Germany's economy.
* Dependence on Russian gas and Merkel's decision to phase out nuclear power contributed to the crisis.
* Liquefied natural gas (LNG) imports have increased costs for energy-intensive industries.
* Electricity prices in Germany are significantly higher than in competitor nations like the U.S. and China.
2. China: From Customer to Competitor
* Germany benefited from China's global integration.
* Chinese manufacturers now produce industrial machinery, vehicles, and other goods that compete with German exports.
* State subsidies and export-oriented policies have made China a formidable competitor.
* China's vehicle production has surged, while Germany's net exports have declined.
3. Skimping on Investment
* Germany neglected long-term infrastructure investments during its economic boom.
* Deficiencies in rail lines, high-speed internet, and energy transmission hinder economic growth.
* A constitutional amendment restricts deficit spending, limiting government investment.
4. Lack of Skilled Workers
* German companies struggle to find qualified personnel across industries.
* Declining interest in STEM fields and an aging population exacerbate the issue.
* Shortage of affordable childcare limits women's workforce participation.
* Bureaucratic hurdles hinder skilled immigrant employment.
5. Bureaucracy
* Lengthy approval processes and excessive paperwork burden businesses.
* Lack of coordination between government agencies slows down permits and registrations.
* Regulations that exceed EU requirements impose additional costs on German companies.