The German economy just can’t seem to get back on its feet, with another year of contraction on the horizon. As more companies struggle, they’re becoming the focus of merger and acquisition specialists.
The situation of the German economy isn’t rosy at the moment, and the future is not looking good either.
German Economy Minister Robert Habeck told reporters in Berlin on Wednesday that the country’s gross domestic product (GDP) is expected to shrink in 2024, meaning Europe’s biggest economy will remain stuck in recession for the second consecutive year.
Unveiling the government’s routine autumn growth forecast, Habeck announced an expected contraction of 0.2%, revising a more optimistic spring outlook of plus 0.3% of growth.
He noted, however, that Germany hasn’t seen powerful growth since 2018 as the country’s own structural problems have been compounded by wider global challenges. “In the middle of the crisis, Germany and Europe are squeezed between China and the United States, and must learn to assert themselves,” he said
The situation of the German economy isn’t rosy at the moment, and the future is not looking good either.
German Economy Minister Robert Habeck told reporters in Berlin on Wednesday that the country’s gross domestic product (GDP) is expected to shrink in 2024, meaning Europe’s biggest economy will remain stuck in recession for the second consecutive year.
Unveiling the government’s routine autumn growth forecast, Habeck announced an expected contraction of 0.2%, revising a more optimistic spring outlook of plus 0.3% of growth.
He noted, however, that Germany hasn’t seen powerful growth since 2018 as the country’s own structural problems have been compounded by wider global challenges. “In the middle of the crisis, Germany and Europe are squeezed between China and the United States, and must learn to assert themselves,” he said.
Data coming out of German businesses is likely to add to Habeck’s woes as they show little reason to believe that the economy will recover any time soon.
In September, the business climate index compiled by the Munich-based ifo Institute saw its fourth consecutive decline, with ifo President Clemens Fuest saying the economy is “under increasing pressure.” A majority of the company managers polled by ifo said they are dissatisfied with their current situation, and pessimistic about the outlook for their business.
The grim economic situation has led DZ Bank economist Christoph Swonke to describe Germany as the “new problem child of the eurozone.”
Corporate vultures are circling
Amid falling sales and revenues, businesses often resort to stronger partners to help them overcome their difficulties.
Germany’s national railway operator, Deutsche Bahn, is a recent case in point. The company has agreed to sell its profitable logistics subsidiary, Schenker, to its Danish rival DSV for about €14 billion ($15.3 billion). The money could provide a much-needed financial boost to the struggling state-owned company which is notorious for frequent delays.
Also hotly tipped for a foreign takeover is Commerzbank. Germany’s second-largest private lender was bailed out by the German government after the 2008/2009 financial crisis, with the state still holding a 12% stake in the bank. Italian bank UniCredit has set its sights on a full takeover of Commerzbank, after clandestinely boosting its effective stake to 21% in September in what industry officials believe could become a so-called hostile takeover.
European Central Bank (ECB) President Christine Lagarde told the European Parliament on Monday (October 7) that cross-border banking mergers in Europe were “desirable” for European banks to be able to compete “at the scale, the depth and at the range” with other banks around the world.
In the meantime, more and more companies are leaving the country altogether, or at least investing more in their factories abroad than in their domestic bases in Germany. Chemical giant BASF, for example, is building a factory worth €10 billion in China. And mid-sized energy service provider Techem was sold by its Swiss owners to the US asset manager TPG.
News Source: DW News
