Surprisingly good economic figures in the third quarter are encouraging – but: “Germany remains the problem child of the Eurozone. “Over the course of the year, we still expect a recession, Germany is stuck in stagnation,” says IW economic expert Thomas Obst. The growth is primarily driven by government and private consumer spending. “Thanks to falling inflation and high collective bargaining agreements, people have more money in their wallets again. This is noticeable in consumption and is likely to stay that way – provided the situation on the labor market does not deteriorate further,” says Obst.
However, the alarm signals remained unmistakable: the order situation in industry is still weak, and the increasing fragmentation of the global economy is putting a strain on companies. Slow investment activity also has an impact. “High taxes and energy prices, bureaucratic burdens and high unit labor costs compared to other countries make the location unattractive. “In addition, the federal government urgently needs to renovate the country’s catastrophic infrastructure and invest more money,” emphasizes the economic expert.
Meanwhile, IW director Michael Hüther is calling on the government to act. “At least when it comes to traffic light initiatives to save the German economy, there is currently a boom. You have to hand it to those in power: They are not keeping quiet about the crisis. The Chancellor has also recently been reneging on his dubious promise of a new economic miracle,” said the expert. There is still no consensus in the traffic light coalition on the crucial question: how the measures to save the German economy should be financed. “According to IW calculations, 600 billion euros will be necessary over the next ten years for a sustainable infrastructure – and thus for the national economy. As long as the federal government does not reach a common denominator on this issue, all the summits will bring us very little. How would it be if the three actors started looking for the commonalities that they do have in common?”
