Germany’s economy is in shambles as Austria takes the EU’s top rank – Merkel’s pre-election catastrophe.
Germany’s economic troubles have gotten worse ahead of one of the country’s most important elections, with Austria poised to take over the EU’s top economic slot.
Germany’s industry expanded only 35% between 2000 and 2020, according to a UniCredit Bank Austria study. In comparison, Austria’s industry grew by 60% in the same time frame.
The mechanical engineering sector accounted for the majority of Austria’s growth, with Frey increasing by 140 percent, three times faster than Germany.
Austria’s industrial growth was likewise 50% greater than the eurozone’s overall growth rate during the same time.
The setback to the EU’s largest economy comes as German Chancellor Angela Merkel prepares to step down this month.
Germany is still battling the economic impacts of the coronavirus outbreak and is striving to get back on its feet.
A global supply shortage is threatening to derail the country’s economic recovery, with the automobile sector taking the brunt of the blow.
BMW, Siemens AG, and Volkswagen have all reported a shortage of resources ranging from simple wooden pallets to memory chips.
“In my career, we haven’t had a situation with so many commodities being scarce at the same time, and I’ve been working with the same materials since 1996,” Thomas Nuernberger, managing director of sales at Mulfingen, Germany-based EBM Papst, a manufacturer of industrial fans, told Bloomberg.
“This is the most difficult situation I’ve ever seen in the global supply chain.”
“I expect growth to be postponed until 2023,” he said, “because we will still have problems with semiconductors in 2022, and the container shipping chaos will extend well into 2022.”
According to Bloomberg Economics, as of June, German companies were still running at roughly 7% below pre-pandemic levels, with automakers and machinery manufacturers in particular falling behind.
“Things are actually growing worse rather than better,” said Clemens Fuest, president of the Munich-based Ifo institute.
Last month, Siemens CEO Roland Busch warned that a global chip scarcity and rising material costs could push the recovery “far beyond 2022.”
Volkswagen CEO Herbert Diess told Bloomberg TV that his business, Europe’s largest automaker, “would suffer some hits in the third quarter since manufacturing is severely constrained right now.”
In July, the company’s global car deliveries fell 19 percent.
Maeva Cousin is a senior euro-area analyst. “Brinkwire News in Condensed Form.”