By Andrea Thomas
BERLIN (Dow Jones) — Federal Minister of Economics Robert Habeck (Greens) has expressed concern about the structural weakness in growth in the German economy. The economic upswing is only taking place at a slower pace. In the past few months, Germany has succeeded in overcoming the energy crisis and pushing the gas price to its lowest level in two years, despite the failure of Russian gas supplies. Nevertheless, the German economy has not grown on average since 2019, despite the Corona crisis, which has also been overcome.
“We can see that now that the concrete crises have gotten under control to some extent, the structural crises are having a fairly massive impact,” he said at the German Savings Banks Conference in Hanover. “No growth – that is of course an alarming signal for such a strong economic nation as Germany.”
In January, the federal government was still assuming that German gross domestic product would record zero growth in the first quarter. In fact, it had shrunk by 0.3 percent compared to the previous quarter. “The development of growth, the upswing this year will slow down as a result or will only begin to slow down,” said Habeck.
There is a structural problem, because the investment activities of companies have declined in the past 20 years, and the municipalities are also investing less. A further complication is that government consumer spending has declined.
The budget for 2024 just negotiated by the federal government promises no remedy here. “Compliance with the debt brake means: There will be no more money,” said Habeck. “We got the current crisis under control, the structural issues are now really having an impact.”
However, he is confident that this challenge will also be mastered.
With limited financial resources, one must become active on the supply side. According to Habeck, the aim here is to advance free trade agreements such as that between the European Union and the Mercosur countries and to tackle the labor shortage.