“It is noted that economists warn that the problem may arise in Germany even before the introduction of any duties.”, — write: www.unian.ua
It is noted that economists warn that the problem may arise in Germany even before the introduction of any duties.
In 2023, the US accounted for 10% of German exports / UNIAN collage, photo ua.depositphotos.comGermany is experiencing the sharpest decline in economic growth among all developed countries. Economists have warned of possible problems due to trade barriers that Donald Trump intends to apply.The FT writes that economists expect the German economy to grow by just 0.6% in 2025, compared to the 1.2% forecast in the middle of the year. The cut in forecasts partly reflects fears that investment will be frozen before Trump returns to the White House.
According to analysts, the political turmoil in Germany worsens the situation. Unpopular in Germany, the tripartite coalition of Social Democrats, Greens and Free Democrats collapsed a day after the US election. Early elections are scheduled for the end of February, but negotiations to form a new government could drag on for months.
In 2023, the US accounted for 10% of German exports, the highest figure in more than two decades. While imports from the US grew much more slowly, Germany’s trade surplus with the US in 2023 reached a record 63.3 billion euros.
According to estimates from the Munich Ifo institute, if Trump introduces 20% tariffs on non-Chinese imports, German exports to the US may drop by 15%. Emphasizing the threat of “geo-economic fragmentation”, the head of the Bundesbank, Joachim Nagel, said that the full implementation of Trump’s plans could negate one percentage point of GDP growth.
But economists warn that the problem could arise in Germany before any tariffs are imposed, as companies cut back on investment at home due to uncertainty and large companies may shift production to the US.
German automakers, which are struggling with an expensive transition to electric vehicles, fierce competition from China and inflated costs, as well as pharmaceutical groups, will be particularly hard hit.
Many economists warn that Chinese manufacturers will redirect products to the EU at discounted prices if the US tariffs are even higher than those of their European counterparts. While this may help lower inflation in the EU, domestic producers will face increased competition and further squeeze margins.
Some experts are more positive, believing that the new US president just created a lot of noise. This time, Trump may use the threat of tariffs as a way to get policy concessions from allies, according to Neil Shearing of Capital Economics.
Germany is extremely important in this regard, considering that of all the major European economies, it has the closest economic ties with China.
Some of the downside for Germany could be mitigated if US demand is boosted by Trump’s tax cut plans, boosting interest in German imports – especially if the dollar continues to strengthen against the euro.
Problems of the German economy – the latest newsExperts have found out that more and more Germans are “climbing” into debt. The reason for the economic problems is considered to be the curtailment of support from the state and the constant decrease in purchasing power against the background of inflation and high interest rates.
At the same time, only in the first half of 2024, about 11,000 German companies declared bankruptcy – the highest figure in almost 10 years.
On October 14, Bloomberg wrote that Berlin is experiencing a moderate recession, which indicates serious difficulties in the largest economy.
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