German Industry Catches Fever, Slows Euro Economy and Raises Threat of Nazism

In Spain in 1983, between forgetting the coup d'état and entering the European Union, an advertising slogan arose that registered in the collective subconscious of the society of the time: “German engineering, within your reach” . That's what an advertising ad for the Opel Corsa says, with German rhetoric in Europe guaranteeing its engine of prosperity and its corporate stability. However, half a century later, brief news of the sophistication of the automobile model Made in GermanyOf course, German begins to break away from the image of perfection.

The large economy of the euro has become, for many analysts, the economic disease of the European market. Not only was it a discounted entry into the recession this quarter, but the consensus of experts indicated that the activity freeze would persist. Its industrial power is losing muscle at a compelling pace Its export capacity has been reduced due to high international geopolitical conflict. Therefore, German engineering loses precision.

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A setback.

As with any rule, it leaves exceptions. Or, at least, interests. Because meanwhile, Germany's GDP ranks third on the planetDisplacing the Japanese from the platform, initially due to the effect of the euro-yen exchange rate, but immediately as a cause overtaking The value, at current dollar prices, is due to the return of the red – this time – to the ailing world economy, whose economy has remained active for only nine months of 2023, and has returned to its recession of the past three decades.

German GDP This quarter may shrink by one-tenth According to market forecasts, it will find “major hurdles” to return to its growth path. According to Frontierview's raw materials and European economist Martin Belchev, the end of cheap energy from Russia is due to a “dangerous loss of steam” caused by the collapse of its exports to China and the slowdown. A commercial security gateway they have maintained with the United States for decades.”

Pechev agrees with many economists who justify the ECB's rapid rate cut. There is an urgent need to revamp its main manufacturing stronghold. In a year of high geopolitical tension, with more than seventy election events drawing more than 3,000 million voters, central banks will play a transcendent role in campaigns like the US presidency. Even Christine Lagarde, president of the ECB, wanted to participate, as she opened Pandora's box and warned of the dangers of Donald Trump's candidacy for the global economy.

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Also Joachim Nagel, president of the Bundesbank; Its adviser Sabine Mauderer and Isabel Schnabel, the German representative on the ECB Council, wanted to see the far-right Alternative for Germany (AfD) brand in various acts of civil resistance against the social uprising. Because Growing support for neo-Nazi ultranationalism This is largely built on political discontent with President Olaf Scholes's coalition cabinet, a loss of productivity and, more generally, the country's socioeconomic decline.

The AfD has taken the anti-immigration message to the extreme Mass deportation of non-German citizens, begins to absorb more than 20% of voting intent; Even to cross the 30% barrier Countries Oriental. With parallel continuity with the rise of the Nazis in the 1930s and their subsequent seizure of power.

Powerful German industry is badly wounded

German GDP has entered recession, judged by the latest forecasts of its evolution between January and March, which would add two consecutive negative quarters and, therefore, a period of technical contraction. After another two – the second and third in 2023 – without a pulse, in total stagnation. If confirmed – it is a consensus of official bodies, Think tanks and private companies, German or foreign- It was a long year before his engine was captured. According to the Bundesbank, the Ministry of Economy agrees, which in its latest X-ray situation admits that the signs of activity in the industrial and foreign sector are nothing more than arrhythmias.

“Recovery is illusory,” its experts say, because, in parallel, “the weakness of domestic demand due to high fiscal costs is undermining the confidence of households and firms.” Bloomberg analysts also share the improvement in the quarter Operation progress stopped. His forecast talks about a one-tenth drop in GDP. In line with the decline in economic sentiment polls by its two prestigious research institutes, Ifo and ZEW.

The industry, in fact, grew 1% in January, better than expected and the first blow of the previous nine months, and 7% in the first two months of 2024 compared to the same period in 2023, as the economy slowed. But with prices falling by 4.1% in February. A magic for Deutsche Bank economist Eric Heymann, he insists German industrial production “is in decline and its decline has not yet bottomed out”After falling 1.2% in “real terms” in 2023 and with consumption and investment expectations in negative territory.

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too It is expected to worsen in 2024, they forecast a 2.5% industrial contraction, which would be a point short of their forecast for the end of the year. “Anemia is deeper and more structural because of European action,” he clarifies.

Political deadlock, geopolitical tensions and the energy crisis explain The number of layoffs in the industry is increasingSteel mills and manufacturing closed from the German industrial era in the early 20th century. Two world wars and revolutionary changes in manufacturing, along with German credit, saved historic emporiums. However, the beginnings of its decline were already evident in 2017, with Angela Merkel still in office and Donald Trump raising tariffs everywhere, even on a loyal German trade partner. Then it lost its competitiveness.

Stefan Klebert, CEO of GEA Group AG, an industrial machinery company with a 19th-century birth certificate, put it graphically to Bloomberg: “Frankly, there's no hope. I don't think you can reverse this descent into hell. It has to be done.” So many things and so quickly. And, meanwhile, German industry is “falling like dominoes.” The old times will not return.

The Neo-Nazi Cocktail: Geopolitical Tensions with Domestic Freeze

The combination is dangerous. The war in Ukraine has cut off the supply of cheap energy to the country's industries and its collateral geopolitical damage has worsened the crisis. An industry that was at its peak seven years ago; Essentially, the gradual Atlantic divide around policies of subsidies for national manufacturing and green projects imposed by the White House created an investment and competition gap between the US and Europe and in the first place due to the classification of China as a geostrategic competitor. For Germany, Russian gas and cut off Along with Asian corporations they have passed the excessive bill that the Eurozone also pays.

Although not everything is to blame for the instability of the world order. Because Germany has failed in infrastructure modernizationIts workforce has aged and its bureaucratic barriers have become more dense and complex.

Besides, Its once iconic and prestigious education system has opened cracks After a long decade of public investment cuts. The collapse of technological skills and scientific-digital knowledge is believed to cause a productivity loss of 14 billion euros, almost the sum of its gross domestic product, in Japan, India and the United Kingdom – from third to sixth in the world – by the end of the century.

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Sudha David-Wilp of the German Marshall Fund in the United States and Jacob Kirkegaard of the Peterson Institute examine foreign affairs in this paper. They change it to the European level. “EU needs Berlin to put its house in order.” Amid a geopolitical and business storm. It can only be addressed by younger immigration and training capital, without neglecting fundamental aspects such as the adaptation of its workers and professionals to the techno-digital era or the easing of its demographic pressures. Although it includes the “rise of national-populism”, it can already be seen on its territory and on the old continent. Berlin – they say – “must empathize with the idea of ​​an influx of foreign talent from Egypt or India, for example, and transfer this strategy to other social partners.”

otherwise, Fall into the webs of far-right intolerance. They say that the reaction against neo-Nazism is too important to let this historical political moment pass. Weigh its growth pattern tied to intensive gas and oil that does not match the investments required for the energy transition. Germany – they insist – needs structural reforms to increase its competitiveness, promote a circular and green economy, attract qualified workers and eliminate bureaucracy.

If you do that, “It will reposition itself as a world leader in manufacturing And trade and the power of the European internal market”. Of course, far from complacent, his finance minister, the liberal Christian Lindner, admitted a few days ago that “we stopped being competitive a long time ago”. So, “we feel poorer,” “not agile.” Bloomberg's In the reports, along with the correct diagnosis, “We must fall more before we rise”

As Volker Dreyer, head of German trade and industry, said. In his opinion, “You can't be pessimistic and say it can't be done now,” because The changes are urgent and the federal agenda “can't overwhelm” the community.. Especially when investments weaken and the far right expands its electoral spectrum.

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