Germany’s Economic Malaise In 35 Charts
What went wrong and what needs to be fixed in Europe’s biggest economy
The worst-performing developed economy globally in 2023, with a contracting real gross domestic product (GDP) and a bleak outlook for 2024. Germany has gone from a country with an exemplary economic model and the envy of other major economic powers, to a place of stagnation, slowing productivity growth, struggling industries, and weak consumers. And it is not just a cyclical development. Many factors have brought Germany’s economy to this state, some of which external, but many of them self-inflicted. The current trajectory is dangerous and could mean a protracted decline, affecting its residents’ fortunes, but is certainly not irreversible.
Some necessary background
After the Second World War, rebuilding and reorganizing Germany’s economy (in conjunction with reforming its society) presented an enormous challenge, given the state of destruction and the emerging Cold War confrontation. The system of a Social Market Economy (soziale Marktwirtschaft) or Rhine capitalism was the one that politicians in the Federal Republic implemented. It is a socioeconomic model in which capitalism is prudently regulated and while free market forces are allowed to some extent to guide economic activity, the state intervenes and oversees, making sure…
