Currently, cyclical headwinds such as the still-developing impact of the European Central Bank’s tightening monetary policy and high inflation – plus the faltering Chinese economy – are being met by structural challenges such as the energy transition and changes in the global economy. , along with lack of investment. in digitalization, infrastructure and education. To be clear, Germany’s international competitiveness had already deteriorated before the Covid-19 pandemic and the war in Ukraine.
To a large extent, Germany’s problems are homemade. Supply chain frictions due to the pandemic, the war in Ukraine and the energy crisis have only exposed these structural weaknesses. These shortcomings are the flip side of the fiscal austerity and misguided policy preferences of the last decade.