Germany probably in recession, central bank partly to blame for green agenda

Germany appears to be in a technical recession thanks in part to climate policies, according to the country's central bank.

The German economy has struggled since 2022, showing strong indicators that its economically crucial manufacturing sector is emptying in the middle of prolonged energy crisis. The Bundesbank, Germany's central bank, said Monday that while the economy's sluggishness may meet the technical definition of a recession, the institution does not currently believe there are credible signs that the German economy is experiencing the deep and prolonged economic decline colloquially associated with a state of recession

“German economic output contracted in the final quarter of 2023, according to the February Monthly Report. Fourth-quarter real gross domestic product (GDP) fell a seasonally adjusted 0.3% in the quarter according to the flash estimate of the Federal Statistical Office, after having practically stagnated in the first three quarters of 2023,” the Bundesbank reported. said in a statement. “Economists at the Bundesbank believe that uncertainty about transformation and climate policy is also likely to have weighed on economic activity.”

Germany rules out keeping nuclear power on despite energy crisis https://t.co/dYUfJrJhQK

— Daily Caller (@DailyCaller) September 8, 2022

Germany's climate agenda aims to generate 80% of its electricity from sources such as wind and solar by 2050. seconds to the Organization for Economic Cooperation and Development.

In the third quarter of 2023, the German electricity sector produced 20% less energy than in the same period of 2022. seconds at the GMK Center. On the demand side, Germany's energy consumption in 2023 was about 8% below 2022 levels and about 25% below 1990 levels, seconds to the clean energy cable.

The country's electricity consumer price index was almost 50% higher in December 2023 than in January 2021, seconds in Eurostat data.

Germany has spent hundreds of billions of euros to drive a broad green energy transition, but the country is on track to miss its climate targets despite this spending. The officials moved shutter the country's remaining nuclear plants in April 2023 amid serious concerns about long-term energy supply.

The Bundesbank also expects economic output to decline again in the first quarter of this year, according to its statement. The central bank also acknowledged that a growing proportion of manufacturers – 37% of all such firms by the end of 2023 – are reporting order shortfalls.

Germany's manufacturing sector has seen growth flat or contracted for four consecutive quarters, a dynamic not helped by high interest rates. seconds to Reuters.

Numerous manufacturers and industrial companies have warned for months that the deteriorating situation in Germany may force them to move their operations elsewhere, and some have already begun this process, seconds at Bloomberg News. A collapse of German manufacturing would be devastating to the economy of the country, once widely considered Europe's powerhouse, given that the sector has historically provided about 20% of annual GDP, according to Bloomberg News.

Germany's economic problems seem to be shaking up the political scene as well. The Alternative for Germany (AfD), the main populist party on the right, has seen its popularity more than double since the war in Ukraine began and caused the country's energy problems to widen. seconds in polling data aggregated by Politico.

The Bundesbank did not immediately respond to a request for comment.

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