Lower Saxony in crisis mode: strong demand for domestic demand!

Lower Saxony in crisis mode: strong demand for domestic demand!

Let's look at the current economic challenges and developments in Northern Germany. This region continues to struggle with a weak economy and the latest reports from the DGB Lower Saxony (niedersachsen.dgb.de) underline the need to strengthen domestic demand, particularly in the automotive sector. The Federal Statistical Office has recorded a sharper decline in gross domestic product (GDP) for 2023 and 2024, and economic output fell in the second quarter of 2023. This information is alarming because it shows that the industry is suffering from the pressure of international uncertainties.

Meanwhile, parts of politics and the business lobby are using the situation to question the welfare state. The geopolitical tensions, especially the war in Ukraine and the consequences of the Corona crash, led to an energy price shock that not only burdened industry but also consumer households. Many are therefore demanding affordable electricity, but criticism of the lack of reduction in electricity tax for households is increasing. E-mobility could also be a key for Lower Saxony's industrial base, but the need for cheap charging current and social leasing models remains inadequately met.

Global economy in view

Another important aspect are the forecasts for the global economy that are currently being drawn up by various institutions. According to the Federal Ministry of Economics (bundeswirtschaftsministerium.de), the global economy is showing a certain degree of resilience and inflation is approaching the central banks' target values. But real income growth and household spending are rising only modestly, while consumer confidence remains well below pre-pandemic levels. The IMF and OECD forecasts indicate global GDP growth of 3.3% for 2024 and 2025, respectively, but this is not enough to compensate for the existing uncertainties.

In addition, there are different economic trends in the major economies: While the USA is benefiting from robust economic dynamics, Europe, especially Germany and Italy, is struggling with low growth rates. However, the euphoria about possible economic stimulus measures could be dampened; Given ongoing uncertainties, such as new trade-restrictive measures, it remains to be seen whether these will actually bear fruit.

Risks and opportunities 2025

An outlook for the coming years shows that 2025 will be characterized by economic uncertainty. Coface (coface.ch) emphasizes that the USA remains a major influence worldwide, but the risk of trade conflicts, especially with China, is increasing. Europe could lose growth momentum due to internal challenges, while economic and geopolitical risks increase in emerging markets, which could further limit freedom in international trade.

The gap between the different regions and their economic developments could therefore continue to grow. While Switzerland, for example, is comparatively stable, many countries around the world are increasingly vulnerable to debt crises and currency fluctuations. Lower Saxony's future infrastructure program can also contribute to stability, but the challenges remain enormous. It remains to be hoped that the strategies to strengthen domestic demand and promote investments in Germany will take effect and, above all, relieve the burden on private households.