Industry under pressure: Germany's economy in free fall!

Industry under pressure: Germany's economy in free fall!

Peter Leibinger, the President of the BDI, described the alarming situation in Germany as a business location as “free-falling” in recent statements. This is reported by the Nordkurier, which takes up the BDI boss's concerns about the deep problems facing German industry. A decline in industrial production of two percent is forecast for 2023, which is the fourth year in a row with a decline. The industry has suffered greatly in recent years, and Leibinger speaks of a structural decline that goes beyond economic fluctuations.

The chemical industry, which is only struggling with 70 percent capacity utilization, as well as mechanical engineering and the steel industry are particularly affected. The construction industry, on the other hand, is showing the first signs of stabilization. In the auto industry, on the other hand, an increase in production is expected, but employment is at risk of coming under pressure. This emerges from Leibinger's current statements, which can also be found in the BDI article, which emphasizes the urgency of this crisis and points out home-made problems since 2018.

Economic prospects and necessary reforms

According to the BDI, economic output in Germany is expected to decline by 0.1 percent in 2023, while the euro area and the global economy are expected to grow by 1.1 and 3.2 percent respectively. Germany is one of the worst performers in the economy, which increases the pressure on the government to act. Leibinger calls for a change in economic policy, with a clear focus on competitiveness and growth. Every month in which structural reforms are not implemented costs jobs and prosperity. Nevertheless, politics must also move - the federal government must give priority to investments over consumer spending in order to create perspective.

One of the BDI's central demands is to reduce bureaucracy. Companies must experience noticeable relief in order to survive in international competition. Transparent use of the special fund for additional investments is considered urgently necessary as funds are being reallocated from the core budget. The previous policy is viewed critically; Important reforms were constantly postponed and investments that would be necessary for a sustainable economy were omitted.

The role in Europe and international competition

Leibinger also emphasizes the need for Germany to play a clear leadership role in Europe. The German economy must represent its economic interests powerfully and form alliances for greater European integration. The shadow of Donald Trump's possible tariff threats is hanging over Germany's export-oriented industry, bringing with it the risk of an even greater contraction of the economy.

Experts point out that industrial production must be reduced beyond the record levels of 2018. According to reporting by Tagesschau, production is expected to fall by 1.5 percent in 2024. However, signs of stabilization appear to be slowly emerging, particularly in the chemical industry, where stronger demand is being registered. At least the lower energy prices could offer a ray of hope here.

Overall, Germany and its industry are at a crossroads. There is an opportunity to set the course for healthy growth through courageous reforms. If the political circle can tackle the problems seriously and develop a future-oriented strategy, we could emerge stronger from the current situation.