Germany’s Economy Is In “Troubled Waters”

World | Author: Diana Kavardzhikova |February 22, 2024, Thursday // 10:06
Bulgaria: Germany’s Economy Is In “Troubled Waters” Wikimedia Commons

Minister of Economy Robert Habeck stated that the economic situation in Germany is exceptionally challenging during the presentation of the significantly lowered new government forecast for growth this year. The German government has adjusted its projection for economic growth in 2024 downward, from 1.3% to 0.2%.

This is linked to the geopolitical instability following Putin's complete invasion of Ukraine, as Germany's industries heavily dependent on energy rely on Russian gas. The persistent high inflation continually diminishes hopes for a rapid recovery. Previously, Mr. Habeck mentioned that “The economy is in troubled waters”.

“With around 700,000 job vacancies currently, Germany's potential for economic growth has declined to 0.7% from around 2% in the 1980s, and it is expected to further decrease to 0.5% if the country fails to address this issue”, said Robert Habeck.

“We lack hands and minds”, he mentioned at a press conference, presenting the government's economic report for 2024, adding that job vacancies will increase due to population aging. One of the solutions proposed in the government's report was offering financial incentives for people who would like to work longer and more flexibly in advanced age.

“Reviewing unemployment benefits for some recipients is another way to address the issue”, said Mr. Habeck. According to a September survey, more than half of Germans believe it's not worth going to work after the government's planned increase in social payments and child benefits. Habeck said around 2.6 million people aged between 20 and 30 in Germany lack professional qualifications. The prosperity and aggressive labor market reforms introduced around 20 years ago were recognized as a key factor in elevating Germany to an internationally enviable level of competitiveness following the recessions of 2003 and 2004.

Habeck stated that Germany cannot address the labor shortage without immigration. He emphasized the need for the country to adopt measures such as expediting visa procedures, offering additional language courses, and providing digital access to German companies for foreigners, to attract immigrants.

However, not everyone is pleased with the prospect of increased immigration in Germany. Support for the nationalist party “Alternative for Germany” (AfD) has reached a record high, making it the second most popular party on a national scale.

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Tags: economy, Germany, growth, vacancies

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