Germany's Recession Worsens Amid Energy Crisis, Inflation, and Rising Far-Right Sentiment

Germany's economy shrank 0.3% in 2022 and is likely in recession currently due to the energy crisis from the Ukraine war and higher interest rates. There are also long-term issues like infrastructure, labor shortages, and climate change costs.

Exports, which have traditionally driven growth, are declining sharply recently, especially to non-EU countries. Germany depends heavily on foreign demand and needs the US and China economies to avoid recession.

Inflation hit 3.7% in December, leading consumers to pull back spending across sectors like cars and furniture. People feel a "cultural unease" about the economic outlook.

The rise of the far-right AfD party during economic discontent risks antagonizing parts of the population and deterring needed migrant workers. Business leaders worry this could harm innovation.

Software firm SAP sees tech investment as a way for companies to overcome challenges. But overall, most forecasts remain pessimistic about Germany's growth in the near term.