According to AP, Germany is considered the country with the largest economy in Europe, leading the world trade with technical products such as industrial machinery and high-end cars. However, over the past five years, the German economy has been in a sluggish state, failing to record any significant growth.
Energy shock
Germany's economy has grown strongly, partly due to the exploitation of cheap Russian energy and gas supplied via pipelines to produce industrial goods for export. However, Berlin has ended this activity with Moscow since the conflict in Ukraine broke out in 2022.
Germany has since switched to using liquefied natural gas (LNG) imported from the US and Qatar, which is much more expensive than pipeline gas. Currently, industrial electricity prices in Germany are also much higher than those in the US and China.
China: From customers to competitors
Germany has benefited from China's entry into the global economy, as German companies export industrial machinery, chemicals and cars to the market. But now, China has become a direct competitor to Germany in the market.
Car exports are one of the strengths of the German economy, holding the No. 1 position in the world for many years. However, in 2024, while Berlin's net exports fell by half to only 1.2 million vehicles/year, Shanghai alone reached a net export of up to 5 million vehicles/year with a production capacity of 50 million vehicles/year. This has seriously threatened Germany's auto industry.
Lack of skilled workers
German companies are facing many difficulties in finding skilled workers. According to a survey by the German Chamber of Commerce and Industry, 43% of businesses cannot recruit enough employees, this figure increased to 58% for companies with more than 1,000 employees.
The situation is further complicated by the decline in the number of students majoring in science, technology, engineering and statistics (STEM) in Germany's higher education sector.
Lack of infrastructure investment
During the period of economic development, Germany has not invested enough in long-term projects such as railways and high-speed Internet. The government focuses on balancing the budget and taking advantage of tax revenue from the booming economy.
This has caused many problems for people's lives, in which trains often experience delays due to outdated railways; access to technology of local businesses is hindered because the speed of Internet has not been widely covered nationwide; projects to build transportation and energy facilities have been delayed.
One of the main causes of this situation is the 2009 amended law, limiting budget deficits and limiting the ability to spend publicly.
From energy shock, competition from China, to lack of investment and skilled labor, the German economy is struggling in many aspects. Without strong reform measures, Germany risks losing its position as Europe's leading economic power.
