Germany Industrial Catastrophe Just Took A TERRIFYING Turn | No One Expected This

Germany Industrial Catastrophe Just Took A TERRIFYING Turn | No One Expected This

#economy #germany #crisis

In a world once compared with precision engineering and unsurpassed manufacturing powers, a huge shift is underway. The heart of Europe's economic center is aching with uncertainty, as the tides of industrial might recede away.

The decline of key sectors like automotive manufacturing has sent shockwaves throughout the economy. Global shifts in trade dynamics and technological disruption are reshaping the industrial landscape at an unmatched pace. But amid difficulty, there is hope. As Europe embraces new avenues, innovation becomes the beacon guiding its path forward.

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Thanks For Watching Our Video; Germany Industrial Catastrophe Just Took A TERRIFYING Turn | No One Expected This

It seems like Germany, the big player in the European Union, is facing some serious economic challenges. You know, that country known for its precision engineering and high-quality stuff? Yes, that one.

According to Uwe Schulz, a lawmaker from Germany, the EU's largest economy is in a tough spot due to its strategy of putting restrictions on Russia. Those sanctions were supposed to give Russia a hard time, but it turns out they've hit Germany even harder.

Schulz, who's part of the right-wing AfD group, thinks these restrictions, along with other economic moves by the ruling Traffic Light Coalition, are pushing Germany toward losing its industrial edge.

He's even saying that this could lead to de-industrialization. Oh, and Russia managed to stay among the top five economies in the world. They even outranked Germany in terms of purchasing power parity.

But hold on, there's more. Industrial production in Germany took a hit recently, dropping 1.5% in June compared to May. And the auto sector, you know, the one that's synonymous with Germany's industrial prowess? Well, that took a whopping 3.5% dive.

This decline is a bit scarier than economists expected, and it's raising concerns that Germany might slip back into a recession. Even the construction sector, with a 2.8% drop, is playing a part in this gloomy situation. Germany barely escaped a recession earlier, and now it's looking like the road ahead might not be all that smooth.

Franziska Palmas, a senior European economist at Capital Economics, thinks this drop in industrial output could be one of the reasons for another GDP contraction in Germany's near future.

Jörg Krämer, the chief economist at Commerzbank, agrees, predicting a dip in GDP later this year. Now, in the first half of this year, about 2.2 million cars were proudly produced by the German Automotive Industry Association. That sounds like a lot, and it's a significant jump from last year.

But it's still 10% less than what it was in the first half of 2019. Hildegard Müller, the president of the industry group, mentioned that with the way things are going in the economy and the number of orders coming in, rapid production growth might slow down a bit.

Now, shifting gears a bit, there's some good news in other parts of Germany's industrial scene, like energy production.

New orders for manufacturing shot up by 7% in June compared to the previous month. Although, you might want to take that with a pinch of salt because those numbers got a bit jumbled up by some big orders.

German industry is still facing some rough waters, as Salomon Fiedler, an economist at Berenberg, put it. There's been a knock from last year's energy price shock, and let's not forget about the soft demand from the US and China. Those factors are playing a role in this situation.

Even Volkswagen, that big carmaker, is having its adventure. Sales in China, which is its super important market, have been a bit sluggish.

In the first quarter, deliveries dropped by 14.5%. There was a bit of a rebound in April and May, but overall, deliveries for the first half of this year were still 1.2% lower compared to the same time in 2022.

Also, European natural gas prices have come tumbling down, standing at 44% below where they were before. While the government is still keeping its hopes up for GDP growth this year, the bigger brains at the main economic institutes and the IMF are thinking we might see a slight drop, like 0.2 to 0.4 percent.

Now, what's causing this rough ride? Well, we've got inflation flying high, interest rates giving some painful jabs, and a slow bounce-back in the precious China market. Add to that the heavy load of energy costs, and you've got a recipe for tough times.
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