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More on the same issue [USER=4631]@moXJO[/USER] , this is why the middle class is saying enough is enough, Germany is a great bellweather because it is the engine room of the EU.

They were at the forefront of the strong swing left and now the results are beginning to be felt, intelligent middle class people can realise that the scenario unfolding there is a precursor to what may happen in most western countries.

As we say Trump is a weird person, but he has skin in the game and he is at least trying to tackle the issue of curbing China's ascendency before it becomes too late.

As China's manufacturing grows exponentially, it becomes increasing difficult to compete and it is growing exponentially because the West is consuming their products at ever increasing rates.

It certainly is an interesting period of time, the longer it isn't addressed the harder it will be to address it.

That's for sure.

This from Vanguard:

[URL unfurl="true"]https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/germany-economic-woes-go-beyond-energy-crisis.html[/URL]

As the world’s third-largest economy and constituting about a quarter of the European Union’s collective GDP, Germany has an outsized impact on Europe’s economic health. The spillover effect from lackluster growth in Germany will act as a drag even if other European economies continue to grow.

The energy crisis is not the main culprit anymore

 

A common narrative is that the energy crisis precipitated by the war in Ukraine is the source of Germany’s woes. Although this was true for most of 2022 and 2023, the evidence points to a different narrative in 2024.

The German economy is highly dependent on exports. And although energy prices remain high relative to pre-war levels, Germany’s trade balance and measures of international competitiveness have now returned close to levels last seen before the energy crisis. The economy has shown remarkable adaptability in finding alternatives to Russian oil and gas and in doing more with less.

The energy crisis is no longer the cause of German malaise. Instead, Germany’s economic weakness in the second half of 2024 can largely be attributed to a significant drop in external demand, particularly from China.

Overreliance on exports, unfavorable demographics, and weak productivity growth

 

For growth, Germany is overly reliant on exports, mainly to China. But this dependency also extends to imports that go into making German goods. Indeed, about 43% of German industrial sectors depend on Chinese imports. Although 81% percent of German manufacturers acknowledge that replacing critical inputs from China would be “difficult” or “very difficult,” the majority (60%) say they have taken no measure to reduce their dependency on China.1

That leaves Germany vulnerable to growing global trade restrictions, on both the import and export sides.

As in other developed countries, aging demographics are also not in Germany’s favor. Over the past decade, immigration has offset a shrinking native labor pool. But this supplemental labor supply could diminish in coming years with potential policy changes.

And weak productivity growth is holding the economy back. A lack of investment in technologies such as artificial intelligence (AI), an inflexible labor market, and red tape are all inhibiting innovation and the efficient allocation of resources.

It's not all doom and gloom

 

It’s tempting to draw a comparison to Japan in the early 1990s—that Germany could be on the cusp of its own Lost Decade. But there are mitigating factors.

First, the government’s recent move to relax its fiscal constraint—the so-called debt brake, the law mandating a balanced budget—is a welcome one, especially if it allows greater investment in new technologies such as AI to support productivity growth. Second, structural reforms, particularly those targeted to improve business and labor market dynamics, hold the key to a more vibrant economy.

It might not be wise to count Germany out, given its history and resilience during the energy crisis. A December 16, 2024, no-confidence vote in the current government, setting up early parliamentary elections in February, underscores a desire for change. Whatever the outcome of the elections, the obstacles remain formidable, and success will require cooperation in Germany and more broadly across the euro area.