BERLIN (AFP): Germany is not once again the sick man of Europe but a tired one that needs structural reforms, Finance Minister Christian Lindner said Friday as he sought to assuage fears of a prolonged downturn in the eurozone’s largest economy.
German output contracted in 2023 by 0.3 percent year-on-year according to official preliminary figures released Monday.
Its economic woes have sparked a debate whether Germany was once again the “sick man of Europe”, a label from the late 1990s when the country grappled with the costly fallout of reunification.
“I know what some of you are thinking. ‘Germany probably is a sick man’,” Lindner told a panel at the World Economic Forum in Davos.
“Germany is not the sick man… Germany is a tired man after a short night and the low growth expectations are partly a wakeup call. And now we have a good cup of coffee, which means structural reforms,” he said.
The German economy’s performance last year was significantly worse than the average 0.6 percent growth in 2023, according to the latest forecasts by the European Commission.
Its economy lagged behind that of not only fellow eurozone members France, Spain or Italy but also other industrial powerhouses such as the United States and the United Kingdom.
Lindner put the blame on the energy crisis caused by Russia’s invasion of Ukraine, but said German economy has shown “resilience” as well as Germany putting a priority on reducing its government deficit and debt.
A modest recovery is expected to get under way in 2024.
The German government forecasts growth of 1.3 percent this year while the International Monetary Fund (IMF) expects the German economy to grow by 0.9 percent in 2024.
In addition to the current economic headwinds, Germany is facing major structural challenges including a shortage of skilled workers as the population ages, a costly transition towards green energy and years of under-investment in infrastructure.
