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How the German Economic Machine Broke Down

by | Aug 15, 2022

Summary

Exports have powered the German economy for decades; now higher costs, a slowing China and an energy crisis are dragging down manufacturing. “These are alarming numbers.” Read more in the Wall Street Journal.

Germany’s economy hasn’t grown for nearly five years. Its recovery from the Covid-19 pandemic has been weaker than any major advanced economy. Its ability to fill its energy needs is in question. And now the country once known as the economic engine of Europe is teetering on the brink of a recession.

It’s a sharp turn of fortunes for Germany’s large manufacturing sector, which flourished over the past two decades just as other Western nations saw industrial jobs migrate to Asia.

Germany’s big and long-successful bet on manufacturing relied on four engines: Free and open global trade, surging demand from China, an efficient domestic workforce and cheap Russian energy.

Each of those is now sputtering.

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Wall Street Journal

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