Project SyndicateProject Syndicate

German deindustrialization is still looming

By Dalia Marin

06 Feb 2023 · 3 min read

Editor's Note

An economics professor weighs in on how competition from China in the automobile space as well as the small-to-medium sized machinery sector, could spell doom for Germany's industrial growth.

MUNICH – A few months ago, Germany was bracing for a harsh winter. After Russia cut off Europe’s natural-gas supply and prices more than doubled, German officials warned of power outages and rolling blackouts. Some cities reportedly planned to convert sports facilities into “warming halls” for the poor and the elderly, and the media speculated about energy rationing. But those predictions did not materialize. In the face of a historic challenge, Germany proved to be more resilient than many had believed.

Yet Germany is still panicking. Instead of fretting about gas heaters, however, Germans are now haunted by the specter of deindustrialization. Not a single day goes by without some media outlet or research institute predicting that factory closures and the rise of China will lead to the country’s downfall. The state-owned bank Kreditanstalt für Wiederaufbau recently warned that Germany faces “an era of declining prosperity.” And Yasmin Fahimi, the head of the German Trade Union Confederation (DGB), warned that the energy crisis would lead to deindustrialization and massive layoffs.

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