FX.co ★ Germany seen as ‘sick man of Europe’

Germany, which has long been considered Europe’s economic engine, is slowly but surely losing its status as the largest economy in the region. According to the International Monetary Fund, Germany is expected to be the only G7 country not to see GDP growth. The once powerful locomotive is gradually turning into a "sick man of Europe" due to its economic hardship and dependence on the Chinese market.

Its current economic state gives rise to more and more questions and concerns, with leading experts trying to understand whether this is a real case or just a simulation. In recent months, Europe's largest economy has struggled to grow but showed no signs of expansion. If the situation does not change, Germany may assert itself as Europe’s "sick man." This term is used to describe a country that is experiencing a prolonged economic slowdown.

"Whether the economy is creeping along, or contracting slightly, I think is a second-order problem. I think Germany is competing for the title of the ‘Sick Man of Europe,'" Thomas Mayer, a former chief economist at Deutsche Bank, commented on the situation.

Local authorities attribute this crisis to the country’s dependence on the Chinese market. In addition, it reportedly stems from bureaucracy, an aging population, as well as the lack of effective reforms to solve these problems. Moreover, Germany's economy ministry does not expect any improvement in the medium term. Economists see German growth lagging far behind the US, UK, France, and even Spain for years to come. Besides, the introduction of new trade restrictions by the United States poses additional challenges to export-oriented Germany, whose biggest trading partner is China.