There is really no joy when you open the business section of a German daily newspaper these days. The negative headlines seem to pile up. There is no mistaking it: Germany is in recession for the second year in a row. The last time there was such a long recession was in 2002 / 2003. And the German government has lowered its economic forecast. It expects overall economic output to fall by 0.2 percent in 2024. Previously, slight growth had been expected.
A slight improvement with growth in gross domestic product of 1.1% is expected for 2025. This growth expectation is based on an increase in private consumption – boosted by high wage settlements – and a stabilization of inflation.
However, the crisis in our economy is essentially structural rather than cyclical. The transformation process towards industrial decarbonization has only just begun in many areas. There are still considerable gaps in digitalization, particularly in public administration. Solutions to improve the shortage of skilled workers, including through a targeted and orderly immigration policy along the lines of other countries such as Canada or Australia, are not apparent. Our transport infrastructure is increasingly becoming an obstacle to mobility. The energy price shock as a result of geopolitical changes will continue to have an impact for a long time to come. And last but not least, China’s changing role on the global markets – particularly in the automotive industry – is causing our economy problems.
Unfortunately, our government lacks the necessary decisiveness and resolve to take targeted measures to create the framework conditions needed to resolve these structural problems within a reasonable period of time.
But this is more urgent than ever in order to maintain or even restore Germany’s attractiveness as an industrial location. This is worryingly reflected in foreign investment in Germany. They fell by 12% in 2023. France and the UK are well ahead of Germany in a country comparison. US companies in particular are investing much less frequently in Germany.
However, as a location still dominated by industry, Germany is urgently reliant on such investments.
Government intervention to seal off our markets against imports through taxes and tariffs is not very helpful. For an export-dependent economy like ours, such measures have a downright toxic effect, as we, like few other countries, are dependent on the free international movement of goods.
At the end of the day, it is always the market and competition that determine the success or failure of a product. And the key factors here are price and quality. This can only be ensured in a functioning competitive environment through innovative strength, productivity and performance.
In the past, the German economy has repeatedly succeeded in doing this and has been able to defy many crises with these skills.
Examples of this can be seen at the SPS Automation Hub – the new meeting place for the automation community – taking place in Nuremberg in November 2024. It is regarded as a highlight event and pacemaker for the automation industry. With its unique concept and multifaceted range of products, solutions and innovations from the field of smart and digital automation, it opens up new future prospects for important areas of our industry.
We would like to thank all the authors for their contributions. We hope you, dear readers, will find this latest issue of Companies & Trends interesting and inspiring.
