Germany's economy is facing a perfect storm, as a long-standing downturn and soaring costs push more companies to the brink. Recent data from the Leibniz Institute for Economic Research Halle (IWH) shows a "sharp" increase in German business insolvencies in October, reaching the highest level in 20 years.
Researchers point to a combination of prolonged economic weakness and skyrocketing expenses as the driving factors behind this troubling trend. The impending election of Donald Trump as US President is also seen as a potential catalyst, with the German economy deemed highly vulnerable to the ramifications.
As the manufacturing sector struggles, with a significant decline in auto production, experts warn that the situation could deteriorate further. Companies across various industries are feeling the strain, underscoring the urgent need for policymakers to address this growing crisis.
Some data:
- German business insolvencies spiked in October, reaching 1,530 - the highest level in 20 years
- German manufacturing production fell 2.5% in September compared to the prior month
- Automotive production dropped 7.8% month-over-month in September
- Experts cite a prolonged economic downturn and soaring costs as the driving factors
- The impending Trump presidency is seen as a potential catalyst for further economic vulnerability
Germany is becoming a textbook example of what happens when interest rates suddenly rise after a long period of zero interest rate policy and interest rate manipulation. The economy, which was bred as part of the Green Deal fashion, is in collapse.