The German economy is on the verge of collapsing, as Merkel’s successor confirmed.
After Angela Merkel’s successor, Olaf Scholz, was named as the next Chancellor, the German economy appears to be on the verge of collapse.
Yesterday, Germany’s Social Democrats, Greens, and Liberals reached an agreement to form a three-party coalition, with Olaf Scholz as the new Chancellor.
Mr Scholz will succeed Angela Merkel, who has served as Chancellor of Germany for the past 16 years.
However, a number of key data points indicate that Mr Scholz will have a difficult time managing Germany’s economy.
Germany’s third-quarter GDP figures were released this morning, and the economy only grew by 1.7 percent, disappointingly below expectations.
The economy is still growing at a rate of 1.1 percent lower than it was before the pandemic.
Victoria Scholar, Head of Investment at Interactive Investor, noted that the picture was mixed, with entertainment and recreation remaining “bright spots” with 13.5 percent growth, while the auto industry continued to struggle with supply chain problems.
“The worst is yet to come, with the energy crunch intensifying and the risk of lockdown,” said Christopher Dembik, head of macro analysis at Saxo Bank.
“On top of that, there are supply chain bottlenecks.”
“We can’t rule out the possibility of a significant slowdown in German GDP in the fourth quarter.”
“A new lockdown could even lead to a contraction in GDP,” says one economist.
Consumer confidence has suffered as a result of rising prices and the spread of Covid.
The GfK Consumer Climate Study found that income expectations and the likelihood of making a large purchase both fell along with overall economic sentiment.
“Consumer sentiment is currently being squeezed from two sides,” Rolf Bürkl, a consumer expert at GfK, explained.
“On the one hand, the number of cases in the fourth wave of the coronavirus pandemic is surging, threatening to overwhelm the health system and resulting in new restrictions.”
“However, due to a high inflation rate of 4%, consumers’ purchasing power is dwindling.
“The prospects for the upcoming Christmas season are now bleak.”
Business confidence was also seen to be sagging the day before yesterday.
The Ifo index, which measures economic sentiment, has dropped to its lowest point since February of this year.
Concerns about the fourth wave of Covid, as well as fears of new restrictions and supply chain bottlenecks, were major factors once again.
Mr Scholz’s handling of the country’s finances will be scrutinized, with expectations that he will be more relaxed than Angela Merkel was.
Steen Jakobsen is a Danish writer.
“Brinkwire News Summary.”