Germany's economy on the verge of a turnaround: The glimmer on the horizon!

Germany's economy on the verge of a turnaround: The glimmer on the horizon!

The economic situation in Germany has turned out to be anything but rosy in recent months. According to the latest reports from Boersian The sheet metal forming industry, a key area in the manufacturing industry, has found itself in a challenging situation. The managing director of the Sheet Metal Forming Association, Bernhard Jacobs, reports a significant decline in sales of 12.2 percent within a year, which has led to over 10 percent of jobs being lost in this sector. A significant signal is also the decline of 4 percent of companies that could no longer withstand the pressure.

Production output is at its lowest level in the last ten years, but Jacobs still sees a small glimmer of hope: “A glimmer – nothing more.” While the black-red government under Chancellor Friedrich Merz has been in office for around 100 days and has focused on issues such as migration and the economy, the latest economic indicators show that there is still a lot of work ahead of us.

Stagnation and skepticism

Chancellor Merz has formulated optimistic goals, including medium-term economic growth of two percent, but there is great skepticism among economists. daily news reports an increasing number of orders in the industry, but the economic situation remains stagnant. Germany is considered to be at the bottom of the list when it comes to economic growth among developed countries.

High energy prices, increased competition and the challenges posed by ongoing changes in industry are just some of the problems plaguing the country. The OECD paints a bleak picture: the weakest economic growth among developed countries is forecast for 2025. Particularly alarming is the forecast from leading economic research institutes, which have reduced their growth expectations for 2025 from 0.8 percent to just 0.1 percent of gross domestic product (GDP).

Weak domestic demand and external influences

The current situation is not just an internal problem. Geopolitical tensions, such as the war in Ukraine, and the US customs policy under President Donald Trump are also putting a strain on the German economy. Combined with weak domestic demand and cautious investment, there is a tense atmosphere. Statista shows that Germany has slipped into recession over the last two years, and many expect this to remain the case in 2024. The forecast for 2024 shows a GDP decline of 0.2 percent, which is the second decline in a row.

Amid all these challenges, providing relief to businesses remains an important goal of the government. Finance Minister Lars Klingbeil is planning tax relief that will bring annual relief of over 10 billion euros. According to Jacobs, reducing bureaucracy is essential to ease the burden on companies and promote growth. While the government is working on these measures, it remains to be seen whether the hoped-for positive effects will soon be visible.

In summary, it can be said that Germany is facing major challenges, but at the same time it also has the opportunity to get back on the road to success through strategic investments in defense, climate protection and digitalization. The coming months will be crucial to whether Merz and his team can turn things around.