Expectations for Germany’s economy to bounce back next year prove it’s not the “sick man of Europe,” according to Bundesbank President Joachim Nagel.
(Bloomberg) — Expectations for Germany’s economy to bounce back next year prove it’s not the “sick man of Europe,” according to Bundesbank President Joachim Nagel.
But the frequent references to the moniker that emerged in the late 1990s following Germany’s reunification highlight the country’s issues — from decarbonizing to managing a demographic shift, Nagel said Tuesday.
“I’m firmly convinced that German industry will master the challenges it faces well,” he told a reception in Berlin. “As far as I’m concerned, ‘Made in Germany’ will continue to be a sought-after and successful trademark.”
Europe’s largest economy hasn’t grown in more than a year and is unlikely to escape a second recession in the second half of 2023 with export demand weak and manufacturers struggling.
But Nagel argued that current weakness isn’t primarily structural — as the public debate about a decline in industry suggests — and pointed to forecasts for growth in 2024. Anticipating a rebound, German investor confidence improved for a third month in October, the ZEW institute said earlier Tuesday.
Nagel did, however, reiterate warnings against complacently. In a report last month, the Bundesbank outlined a series of steps needed to keep Germany competitive. Asked about the proposals, Finance Minister Christian Lindner said his government is doing everything it can to offer support.
“Prophecies of doom are inappropriate,” he said last week, pointing to “enormous turnaround potential and solid economic foundations.”
In Berlin, Nagel said that “when I look at how German industry has responded to the recent challenges, I am broadly optimistic.”
The European Central Bank’s ramp-up in interest rates is showing its effects, he added — even as inflation and uncertainty remain high.
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