Europe sanctions Russia, German economy bites the dust
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A German economic research institute declares that "Germany's economic situation is darkening."
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German flag flying next to the German National Parliament or Bundestag in Berlin, Germany (AFP)
Sanctions that were supposed to be a deadly blow to Russia's economy have turned into a nightmare for Germany, Europe's largest economy.
The hysteric sanctions, unprecedented in history in terms of volume and period span in which they were adopted, did not subdue Moscow, rather, they shoved the German industrial complex downhill, leaving one of the EU's most powerful countries vulnerable to rising energy prices and sticky inflation rates.
Germany is on a steady path of economic downfall and de-industrialization as a result of Europe's anti-Russia policies and sanctions, German MP Uwe Schulz, a member of the right-wing AfD party, declared.
Read more: Making sense of a self-induced recession in Europe
Punitive measures against Russia have failed but struck Germany's economy, he said in a statement that was published on his party's website.
It was “not surprising that in 2022 the Russian Federation displaced Germany from fifth place in the ranking of the world's leading economies," he added.
“Sanctions against Russia and economic measures by the ruling Traffic Light Coalition [the Social Democratic Party of Germany, the Greens and the Free Democratic Party] are leading Germany and its economic activity straight to de-industrialization."
Russia was ranked in the top five world's largest economies as of the end of 2022 as per a recent World Economics report, and it outgrew all of its European peers in terms of purchasing power parity (PPP).
The report showed that Russia surpassed Germany's $5 trillion economy when factoring based on the PPP metric.
The politician pointed out that evidence of the extreme impact of sanctioning Russia on the German economy is the “disappointing economic prospects [for the country] for 2023,” as well as “poor results in the automotive industry, [which] continue to lead to lower manufacturing output.” In this regard, the lawmaker called on the German government to immediately “lift economic sanctions against Russia” in order to “prevent [further] economic damage.”
Read more: German industrial production decreases, concerns about economy rise
'Sick man of Europe'
"Germany's economic situation is darkening," Clemens Fuest, the president of the ifo Institute, the Leibniz Institute for Economic Research at the University of Munich, said earlier this month.
Germany's GDP is set to fall again during the current quarter, the research institute concluded.
In June, the Eurozone officially announced it had entered recession. Among the main factors for this financial crisis was the downturn of the bloc's biggest economies, on top of which was Germany.
Following this event, official data released earlier this week showed that the German industrial output experienced a significant decline in June. Germany's crucial industrial heavyweight, the automobile sector, experienced a significant drop of 3.5%, further exacerbating the overall decline. The situation is exacerbated by fluctuations in significant orders, which have significantly impacted the industrial economy, despite rising demand.
German Economy Ministry warned of a pessimistic outlook for the economy attributing the slump to surging energy prices and elevated interest rates that have adversely impacted various sectors of industry.
Further offering dreadful forecasts on the German economy, Stefan Wolf, the head of the Federation of German Employers' Associations in the Metal and Electrical Engineering Industries (Gesamtmetall), said earlier this week that Germany's products are no longer competitive in the market.
It has become the “sick man of Europe," he added.
The phrase “sick man of Europe" was used by the press in the late 1990s to describe the dire state of the German economy, which was dwindling in heavy debt and was facing high expenses to rebuild its fragile production industry.
Wolf said that a recession is looming in the country in the second half of the year.
