According to the International Monetary Fund (IMF), Germany is predicted to have the lowest economic growth among major economies this year due to ongoing pressure on its manufacturing sector. Analyst Mr Vistesen highlighted two key factors contributing to this decline: the country’s previous reliance on Russian gas, which has left it vulnerable to the energy crisis resulting from Russia’s invasion of Ukraine, and China’s lackluster recovery, which has negatively impacted German exports.
Carsten Brzeski, an economist at ING, commented that Germany is currently trapped in a state of uncertainty between stagnant growth and a potential recession. Recent sentiment indicators paint a bleak picture for the country’s economic activity in the upcoming months. Weak purchasing power, reduced industrial orders, the consequences of aggressive monetary policy tightening, and a projected slowdown in the US economy all contribute to this pessimistic outlook.
In addition to these cyclical factors, Germany also faces structural challenges such as the ongoing conflict in Ukraine, demographic changes, and the ongoing energy transition. These factors are expected to continue to weigh on the German economy in the years to come.
In contrast, the French economy experienced a significant acceleration, with growth of 0.5% in the second quarter compared to 0.1% in the first, as reported by the country’s national statistics agency.
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