The chancellor and her main challenger are painting a reassuring but misleading image of the country, however. For quite some time now, Germans have suspected there is little reason for complacency. Anyone who travels through the country will notice roads full of potholes, disused railway tracks and dilapidated schools. And anyone who works for one of the country’s large industrial companies also knows that most new production plants are built abroad, not in Germany.
Now, economists have translated Germany’s deficiencies into hard numbers. The German Institute of Economic Research (DIW) is presenting a study this week that proves Germany is not Europe’s economic hegemon, as British weekly The Economist recently suggested on its cover. Instead, the DIW paints the picture of an ailing economy that has been seriously out of balance for years.
Germans save more money than most living in the industrialized world, but they invest very little in their future, making them much weaker economically than leading politicians realize. According to the study, Germany is saving itself to death.
Yep. And let’s also not forget Germany’s age pyramid.
In the more immediate term, that said, they have the bigger problem of being the EU’s main creditor. If you owe $100 to the bank, it is your problem; if you owe $100M, it is the bank’s problem. Especially if you can’t and won’t pay the money back.
I wouldn’t be surprised if Germany (or China, for that matter) eventually turns out to be the hardest hit by the (still ongoing) 2007 economic crisis. Its exports depend on its banks issuing loans to importers, and its savers depend on these loans getting paid back. Tough times will lie ahead.