### Summary
Germany's economic decline and China's struggles indicate major changes in global politics, challenging previous assumptions about Germany's dominance and China's rise as the world's largest economy.
### Facts
- German foreign minister Annalena Baerbock's diplomatic mission to enhance Germany's status in the Indo-Pacific region was derailed when her government's jet broke down, reflecting the country's declining state.
- China's official statistics bureau announced it will stop publishing regular youth unemployment figures after the record-high rate of 21.3% for Chinese 16 to 24-year-olds in June.
- Germany's economy is in decline, with three consecutive quarters of contraction. The International Monetary Fund predicts slower growth compared to the US, France, and the UK over the next five years.
- Angela Merkel's decisions, such as relying on Russian gas and neglecting defense spending, have contributed to Germany's decline.
- China's economy, once booming and beneficial for German exporters, is now facing challenges due to a stagnant market, aging population, contracting labor force, and a massive property market bubble.
- Foreign investment in China has significantly dropped, and China's position as the world's largest economy is in question.
### Analysis
- The decline of Germany and China disrupts previous assumptions about Germany's dominance and China's rise as a global superpower.
- Germany's decline opens up opportunities for closer bilateral relations with countries like France and Poland.
- The stability and prosperity of Germany remain important for Britain, but it also presents opportunities for the country.
- The United States retains its position as the top global power, which is beneficial for Britain as a key ally.
- Britain has its own challenges, such as high inflation, slow growth, high taxes, weak infrastructure, and the need to attract dynamic entrepreneurs and innovation.
The Swedish economy is expected to experience a downturn over the next two years, with GDP forecasted to shrink in 2023 and 2024 due to low domestic demand and a slowdown in export growth, making it one of the worst-performing economies in the EU; however, there is uncertainty and the possibility of a milder downturn depending on the resilience of the economy. Furthermore, the Swedish krona is expected to continue weakening until mid-2024, and household incomes are projected to fall until 2025, but households are strengthening their financial positions and reducing debt.
The German economy stagnated in the second quarter of 2023, following a winter recession, with zero growth and a contraction in adjusted GDP, according to data from the statistics office.
Germany's business activity contracted sharply in August, causing concerns about the country's economy, and its plans to be carbon-neutral by 2045 pose a risk to its industry, according to Hans-Werner Sinn, president emeritus at the Ifo institute.
The German government has presented its 2024 budget, aiming to end years of government spending on managing crises such as COVID-19 and the war in Ukraine, with significant cuts across departments and limited social reforms, leading to controversy among coalition partners and opposition parties.
Ukraine's economy grew by 2.2% in the first seven months of 2023, recovering from the impact of the Russian invasion in 2022, with the number of registered entrepreneurs surpassing pre-war levels.
The European Commission has revised down its economic forecast, citing high prices for goods and services as a significant factor, leading to reduced growth projections for the European Union and the eurozone. Germany is expected to experience a downturn, while inflation is projected to exceed the European Central Bank's target. Weak consumption, credit provisions, and natural disasters are also contributing to the loss of momentum in the economy. However, the report highlights the strength of the EU labor market with a low unemployment rate.
Germany's economy is expected to contract by 0.4% in 2023 due to higher inflation, rising interest rates, and weaker consumer spending, making it the worst-affected major country in the eurozone, according to the European Commission. The overall eurozone economy is expected to expand by 0.8% in 2023 and 1.3% in 2024, leading to a potential halt in the European Central Bank's tightening of policy. Inflation in the eurozone is projected to average 5.6% in 2023.
Goldman Sachs and J.P.Morgan have revised their full-year growth forecast for the UK's GDP due to a sharp contraction in the economy in July, with JPM now expecting 0.4% expansion and Goldman Sachs projecting 0.3% growth. Economists warn of the possibility of a recession as poor economic data continues to emerge, and GDP data indicates a weakening economy.
The Chief of Defence Intelligence of Ukraine believes that if the war of aggression against Ukraine continues, the Russian economy will only hold out until 2025 and their arms supply will dry up in 2026 or earlier.
The German economy is expected to contract this quarter due to a recession in the industry and lackluster private consumption, leading to four consecutive quarters of negative or flat growth.
Germany is projected to be the most heavily impacted by the global economic slowdown due to higher interest rates and weaker global trade, according to the Organisation for Economic Co-operation and Development (OECD), with its economy likely to shrink this year alongside Argentina and experience a weaker 2024. The slowdown in China, inflationary pressures, and tightening monetary policy are among the factors affecting Germany's growth. The OECD also warned of persistent inflation pressures in various economies and called for central banks to maintain restrictive interest rates until underlying inflationary pressures subside.
Germany is facing an economic contraction due to challenges in the manufacturing sector, a disappointing China reopening boost, and higher energy costs, leading to a recession in Europe's largest economy. However, there are still some positive aspects, such as opportunities in Germany's small and mid-sized companies.
The euro zone economy is expected to contract this quarter and remain in recession as the impact of central banks' interest rate rises hampers growth, according to a survey by HCOB's flash euro zone Composite Purchasing Managers' Index (PMI), with Germany and France experiencing significant declines in business activity.
Germany's economy, once dominant in global markets, has become the worst-performing major developed economy due to the loss of cheap Russian natural gas and other chronic problems, leading to criticism and concerns about de-industrialization and job losses.
Germany, once the beating heart of the European economy, is facing structural challenges and a sense of decline, with forecasts predicting slow growth and contraction in the coming years due to its heavy reliance on manufacturing and struggle to transition to renewable energy and a service-based economy.
The UK economy is expected to slow in 2023 and 2024 due to high interest rates, continued uncertainty, and low productivity, with GDP growth predicted to drop to 0.4% this year and 0.3% in 2024, according to economists at KPMG and the OECD.
Russia's economy is expected to grow by 1.5% this year, defying previous projections of contraction and proving more resilient than expected to Western sanctions due to rising oil prices and new export markets, though an eventual slowdown is still predicted.
Germany's economy, the largest in the EU, is expected to contract by 0.6% this year due to a slowdown in exports and years of under-investment in infrastructure and technology, posing long-term challenges for growth and requiring significant investment and reforms to address them.
German industrial output contracted for the fourth consecutive month in August, falling by 0.2%, indicating ongoing pressure on the sector and raising concerns of a recession, as analysts predict further decline in the coming months due to high interest rates and falling demand.
German industrial output contracted for the fourth consecutive month in August, raising fears of a recession in the sector, as falling demand and high interest rates continue to put pressure on the economy.
Germany is projected to experience a deeper recession than previously forecasted, with its economy expected to contract by 0.5% this year due to inflation, manufacturing decline, weakness in interest-rate-sensitive sectors, and slower trading-partner demand, according to the International Monetary Fund (IMF).
