Business Maverick: Germany’s Hopes of Avoiding a Recession Are Shrinking by the Day

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Germany’s economic prospects are worsening by the day as record inflation haunts households and threats swirl over supplies of everything from Russian natural gas to manufacturing components.

Growth in Europe’s largest economy will be the weakest among the Group of Seven nations this year, according to fresh forecasts published Tuesday by the International Monetary Fund, which predicts expansion will dip further in 2023.

The bleak outlook confirms weeks of warnings out of corporate Germany: Industrial giants including BASF SE and Thyssenkrupp AG are imperiled by reduced Russian energy deliveries, while soaring prices are scaring shoppers away from retailers such as Zalando SE and the chip drought that’s shaken carmakers since 2019 isn’t going away.

“Germany is Europe’s problem child in many respects,” he said. “Nowhere else are supply shortages hurting the economy more, the shortage of skilled workers has increased, and then of course there’s our extremely high dependence on Russian gas.” Sharp declines in confidence surveys suggest businesses and consumers are retreating fast, with gauges of expectations and new orders pointing to more trouble down the line. Gas prices have more than doubled since the start of June and surged in excess of 10% this week after Russia announced another cut in deliveries due to pipeline maintenance.or partially suspending operations, according to the Association of German Chambers of Commerce and Industry.

 

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