Germany is in an economic crisis and the growth rate is falling rapidly. Nevertheless, the government promises people a new ecological economic miracle (Wiwo: 01.06.23).
Germany’s green economic miracle is missing: Current statistics reveal the murky reality
The economic miracle promised by Chancellor Olaf Scholz through the green transformation does not materialize. The current statistics show exactly the opposite. Industrial production fell by 3.4 percent and so did the ifo business climate index after six consecutive increases. Germany is currently in a slight recession. The government only expects economic growth of 0.4 percent, which is far from an economic miracle. Even economists are not convinced that a new economic miracle, i.e. economic growth of four to six percent, is realistic in the foreseeable future.
Why a green economic miracle is unrealistic
Clemens Fuest, President of the ifo Institute, commented in March in a guest article for the “Handelsblatt” and explained that this miracle will not happen due to various burdens. These include permanently higher energy prices, trade conflicts and the shrinking working population. But there is an even more fundamental reason. If the energy system is transformed with high investments to produce less CO₂ emissions, this will require “significant” resources. These resources would then no longer be available for the production of other goods. “This would not be a problem if there was enough free production capacity that could handle this conversion without other activities suffering as a result,” Fuest continued. Unfortunately, due to the lack of skilled workers, this is not the case.
According to the economist Fuest, the investments do not create any additional production capacities, but only replace existing ones. This creates hardly any additional growth potential. Fuest judges that the hoped-for economic miracle will not materialize. In fact, prosperity, measured by the consumption of goods and services, is even more likely to decrease. His conclusion is that politics cannot bring about a second economic miracle, but it can help to prevent economic decline.
Economic miracle illusion: Experts have doubts about feasibility and the current recession is increasing skepticism
Fuest is not alone in his opinion, as other economists also describe the idea of a second economic miracle as unrealistic and nonsensical. No developed, prosperous country could experience a second economic miracle in the historical sense.
In the first three months of this year, the German economy shrank by 0.3 percent. Since this is the second consecutive decline, it is called a technical recession. That is exactly the opposite of an economic miracle. It’s just not enough to make promises without laying the foundations for an economic recovery.
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