Germany struggles with an energy shock that exposeslongtime flaws
ESSEN, Germany For most of this century, Germany racked up one economic success after another, dominating global markets for high-end products like luxury cars and industrial machinery, selling so much to the rest of the world that half the economy ran on exports.
Jobs were plentiful, the government’s financial coffers grew as other European countries drowned in debt, and books were written about what other countries could learn from Germany.
No longer. Now, Germany is the worlds worst-performing major developed economy, with both the International Monetary Fund and European Union expecting it to shrink this year.
It follows Russia’s invasion of Ukraine and the loss of Moscow’s cheap natural gas an unprecedented shock to Germanys energy-intensive industries, long the manufacturing powerhouse of Europe.
The sudden underperformance by Europe’s largest economy has set off a wave of criticism, handwringing and debate about the way forward.
Germany risks deindustrialization as high energy costs and government inaction on other chronic problems threaten to send new factories and high-paying jobs elsewhere, said Christian Kullmann, CEO of major German chemical company Evonik Industries AG.