German economy contracts 0.2% in 2024 in second consecutive annual slowdown

[zinssmeister]

Germany’s economy has been heavily dependent on specific sectors, particularly the automotive and machinery industries. These sectors are so vital that any decline in their performance could have significant ripple effects across the economy. However, the global market is increasingly shifting towards electric vehicles (EVs) with advanced software interfaces. Companies like Tesla and Chinese manufacturers have taken the lead in this space, while German carmakers have struggled to adapt to the EV and software revolution.

Germany also has been facing two big challenges that have seen limited action: rising energy costs and slowing exports to China, both of which have started around 2020. The decision to rely heavily on Russian energy to sustain its industrial economy has proven to be a bad idea. The influx of low- or unskilled labor into a social welfare system, coupled with the challenges of cultural integration (German culture isn't the sexiest of things), has also turned out to be a bad idea.

Bonus issue: Germany’s taxes are high, particularly for individuals and workers. Some of the highest in the world. This gives consumers less $ to consume with.

[pydry]

>The decision to rely heavily on Russian energy to sustain its industrial economy has proven to be a bad idea.

The decision to rely heavily on American military hegemony has proven to be a far worse idea than piping gas from Russia. Without military sovereignty, they don't get to choose their economic partners. Without the ability to choose their economic partners, they have to accept dictates about their economic relationships. Because of that they have to suffer.

The same thing happened with Huawei - America decided that Europe needed to decouple from them so decouple they did.

As for the moral argument - what Russia is doing in Ukraine is awful, but what Israel is doing in Gaza (with Germany's blessing) is SO much worse. Germany follows America's dictates on both, so their economic relationship to the genociders is still maintained even though it has very little impact on the health of the Germany economy.

Now Trump is in charge, Europe is being told that it still has to fall in line, but it needs to jack up its own military spending as well - America has shifted focus East and isn't all that interested in defending Europe any more (if it ever was).

[overstay8930]

Germans can only blame themselves for kicking the can down the road for 13 years. They were naive with Russia for energy, they were naive with the U.S. for security, and they were naive with China for its economic growth.

[pydry]

They're politically captured and lacking sovereignty more than they are naive. It's awkward and nobody wants to admit it but fundamentally they have a relationship with the US that is similar to the one Belarus has with Russia.

That's why when the pipeline was blown up and they became dependent instead on more expensive American LNG they accepted their fate with a minimum of protest. It's why they've not demonstrated much interest in finding the culprit, despite the incredible economic damage it incurred.

[Mashimo]

And still don't understand anything digital.

[throw839449]

There was terrorist attack that destroyed most of Germany energy infrastructure. You can hardly blame Germans for not prediction that!

[rkarnal]

Unlike the U.S., Germany has no natural resources. U.S. LNG dependency means that it has another master. Except that the previous one never dictated anything to Germany, just like Saudi Arabia never dictates anything.

They are not naive with security. Either they fully defend themselves and get nuclear weapons or they keep the status quo. Buying useless F35 (possibly with a kill switch) from the U.S. just enriches the MIC.

Germany should have build up a "high tech" Internet industry so it could control which parts of the narrative get flagged and which ones stay up.

[ArtTimeInvestor]

I would like to learn more about the situation of the German economy.

Is there any industry in Germany that will grow in the coming decade?

Has anything important been developed in Germany in the last decade?

Have there been any big IPOs in Germany in the last decade?

Germany's companies seem to have very low p/e ratios. This means the market expects them to tank. Are there companies in Germany with a high p/e ratio, say over 100? Off the top of my head, I can only think of SAP. A company that I find hard to reason about.

[darth_avocado]

Anecdote: a friend of mine, a mechanical engineer with master’s degree in automobile engineering from one of the good German Universities ended up working for the biggest German Automakers. Him being the only non German, non White person in his department, had his entire experience be “This in not <insert your country>, this is Germany. We do things a certain way.” He moved to the US after 2 years and worked for Tesla and now Rivian. Not only did he make a bunch of money, but he now gets to work on the new technology. Meanwhile the old company is trying to keep up and stay current with the times.

[jplrssn]

I'm not disputing that the German economy has issues, but is a large number of companies with a P/E ratio over 100 really a sign of a healthy economy?

Explosive growth can only continue for so long before the bubble bursts.

[yorwba]

The fastest growing economic sector in 2024 was "Information and Communication" with a 2.48% inflation-adjusted growth rate: https://www-genesis.destatis.de/datenbank/online/statistic/8... I think it'll likely keep growing faster than the rest of the economy for a while.

[TMWNN]

I read an interesting point recently: Austria's 100 wealthiest families have two thirds of the country's wealth, and none has earned their money from technology; they've all inherited it. How different would the same list be for Germany? One, perhaps two families earned their fortunes from tech? Zero outside of SAP, a company founded 50 years ago?

[tharmas]

Germany is still a complex economy. They will likely be like Japan over the last 30 years.

[megous]

Offense industry.

[ChemSpider]

Important new developments in Germany in the last 10 years? Interesting question, I can think of two right now:

- Stable Diffusion at Heidelberg University

- Biontech/Pfizer covid vaccine in Mainz

- What else?

[marcodiego]

What I fear: blaming on the immigrants.

[cybrox]

Don't blame it on the people, correct.

However, it is safe to say that the policies surrounding this sector have failed quite spectacularly in bringing new talent to Germany in the past 10 years.

[amai]

Why does Germany still have so many economic immigrants if the economy is doing so badly?

[entropi]

Economic immigrant in Germany here. And most of my friends are also skilled -economic- migrants (mostly doctors/engineers/scientists) as well. Maybe I can draw a picture. There are a number of reasons, but I would say the biggest one is this: while I am told things are a lot worse than it was, the situation here is still a lot better than it is in my home country. I also have no hope for my home country; while I think Germany will probably get better eventually.

Now, for the alternatives; emigrating to US is rather challenging with all the H1B shenanigans going on, while my friends who has moved to Canada all eventually came to hate their lives and moved to other places. If you don't speak the local language, there are not many jobs in a lot of the European countries. Japan is not really welcoming to immigrants, and Australia is seen as too remote. This leaves you with few choices in the first world; Britain, Netherlands, and Germany. I got the first job offer from Germany, so I am here. Quite a few of my friends were thinking along similar lines, so they are scattered across these three countries.

[snehk]

Because the government continues to expand social welfare programs.

[amai]

In other news Germans are richer than ever:

https://fakti.bg/en/world/939006-germans-richer-than-ever

[boringg]

Who turned off the cheap GHG free Nuclear power? Who cheated on the emissions tests for the main exported vehicle? I have to assume you think all of germany's problems aren't of their own making per the tone of your comment.

[inglor_cz]

Merkel's plan to buy prosperity for Germany by buying cheap resources from Russia and selling a lot of manufactured products to China failed totally, so to say.

Meanwhile Germany didn't invest enough into infrastructure, nor into high-tech industries. Too much reliance on extant branches such as car production.

They are sick man of Europe again, and mostly as a result of Merkel-era politics. Any US pressure is small fry compared to their self-inflicted wounds.

[alephnerd]

Maybe Germany should have begun decoupling from Russia in 2014 after the invasion of Crimea.

Instead, Germany Inc sold out to Russia and China - with national champions like Deutsche Bank becoming addicted to it's Russian originated business and Volkswagen becoming addicted to Volkswagen China.

[sickofparadox]

The 'US foreign policy blob' had been warning Germany that basing your energy policy on purchasing fossil fuels (which you are trying to get rid of) from a dictatorship in the hopes it gets them to play nice was a stupid idea and now Germans are paying the price for poorly thought out foreign policy. Good thing they still have those nuclear plants, right?

[GiorgioG]

If Europe invested more in their militaries they could dictate their own terms with their neighbors.