Germany, Once a Powerhouse, Is at an Economic ‘Standstill’ (2024)

Germany started the year with Berlin’s streets choked with tractors and farmers blaring horns in furious protest of proposed budget cuts. Then train engineers walked off the job to demand better pay, stranding commuters and carloads of freight and leaving the country angry and gridlocked.

The same could be said for the state of the German economy. Last year it contracted 0.3 percent, official figures showed this week, making it not only the largest economy but also the slowest growing among the 20 countries using the euro. Industrial production has fallen five months in a row.

“The economy is at a standstill in Germany,” said Siegfried Russwurm, the president of the Federation of German Industries. “We don’t see any chance of a rapid recovery in 2024.”

Since it was rebuilt after World War II, Germany has been Europe’s main driver of economic growth, becoming an industrial powerhouse known for vast factories and fine-tuned engineering.

But now its automakers must compete with relatively cheap electric cars from China, and it vies with the United States to attract tech giants. There is a growing realization that Germany has not been successful updating its industry with sufficient flexibility and digital know-how to remain competitive.

As the economy sputtered last year, the government was nearly paralyzed by bickering among members of the three parties that make up Chancellor Olaf Scholz’s ruling coalition. Then came a budget crisis in November, causing the government’s popularity to plunge in polls.