La Brève – Is Germany’s economic model running out of steam? – EURACTIV.com

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The last few years have been a bumpy road for the world champion in exports. The German economy has suffered from the pandemic, global supply chain shortages and, of course, reduced Russian gas imports.

For decades, Germany’s economy has been driven primarily by its strong export industry, with around one in four jobs currently dependent on it. However, this business model seems to be in play as the world exists in what appears to be a constant phase of crisis.

The first warning signal of this decline is already there: in May, Germany recorded a trade deficit for the first time in 14 years.

While it’s tempting to dismiss this dramatic development as having been driven solely by rising energy prices and current gas shortages, there are already signs that the patient has been ill for some time.

Germany has long prided itself on its high trade surplus – often to the chagrin of its European partners – but the gap between imports and exports is narrowing. Over the past five years, the trade surplus has been shrinking year by year.

The current geopolitical situation is not favorable to German industry. The world’s fourth-largest economy has long relied on imports of cheap energy from Russia and raw materials from China, but maintaining this pattern is proving increasingly difficult.

While Russia is already excluded due to the war in Ukraine, Germany is increasingly looking with concern at its trade relations with China.

Many analysts and politicians, including Germany’s own Chancellor, Olaf Scholz, are currently warning that the world could find itself split into two geo-economic blocs – those aligned with the West and those working more closely with China and Russia.

“There is a mistake we must not make: promoting bloc formation and the disintegration of the global economy by dividing it into ideological camps,” warned Siegfried Russwurm, president of BDI, the powerful German industrial association, in June. .

If trade relations with China take a hit, the German economy will suffer enormously. China is Germany’s largest trading partner and not only fuels the country’s strong export industry, but is also key to keeping Germany’s industrial engine running by supplying essential raw materials and other goods he desperately needs.

This heavy reliance on China is already giving the German government headaches.

“It’s clear to all of us: this very strong bilateralization of the relationship between Germany as an exporting nation and China is not healthy either,” the German finance minister said in mid-April. Christian Lindner.

German companies are also well aware of the impending threat.

While 46% of all German companies say they are currently largely dependent on Chinese imports, more than two-thirds admit to seeking diversification in their supply chain, according to a study by the ifo institute.

While it remains to be seen whether Germany’s export-driven business model will survive the multitude of crises facing the world, one thing is certain: Germany’s traditional approach of buying from the lowest bidder, no matter what. arrives, found itself in an impasse. .


The roundup

To help reduce energy prices and phase out imports of Russian fossil fuels, the four largest political groups in the European Parliament have united behind proposals to raise the EU’s energy efficiency target for 2030.

The activists are warning against “major factors” of uncertainty in the reform of EU agricultural statistics approved by the European Parliament’s Agriculture Committee on Tuesday.

After casting a vote of no confidence, the left-wing coalition NUPES well below the majority on Monday necessary to overthrow the French government.

European cloud companies want to stick together as the European Cybersecurity Agency (ENISA) is must present its new certification scheme to ensure that the Services are immune to extraterritorial laws.

The two European agencies responsible for assessing the risk of glyphosate have defended their approach to assess whether the herbicide is safe for further approval in the EU.

Meanwhile, as the impending ban on combustion engines ticks the clock on the lucrative fuels market, the biofuels industry aims to strengthen its position in other transport sectors.

In other news, Cancer screening, long-term COVID-19 vaccine contracts and care for Ukrainians will be among the top health priorities of the Czech Presidencysaid the Czech Minister of Health.

Finally, check out our Transport Brief for a roundup of weekly transport-related news.

Pay attention to…

  • European Parliament committee meetings until Thursday.
  • The College of Commissioners meets Wednesday in Luxembourg with the European Court of Auditors.
  • Informal meeting of environment ministers in Prague until Thursday.

The views are those of the author.

[Edited by Zoran Radosavljevic/Alice Taylor]

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