Years ago, The Economist of the UK once labeled Germany, which was then in a state of economic downturn, as the "sick man of Europe." Now, it seems that this "sick man of Europe" is showing signs of a relapse.

Data released by the German Federal Statistical Office on a certain date shows that Germany's Gross Domestic Product (GDP) decreased by .% in the year, marking a second consecutive year of negative growth following a .% contraction in the previous year, a rare occurrence since the year. The International Monetary Fund (IMF) has expressed deep concern over Germany's economic outlook and recently revised its growth forecast for the year down to .%, placing it at the bottom among both developed economies and emerging markets.

Germany has long been renowned for its robust economy, emphasis on innovation, and status as an industrial powerhouse, often hailed as the "economic engine" of Europe. However, this engine now appears to be losing momentum, with its former advantages increasingly overshadowed by high inflation, weak exports, and structural issues.

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The economy has fallen into stagnation, with a frequent occurrence of "bankruptcy and layoff waves."

"Germany is currently experiencing the longest period of economic stagnation in its post-war history, and its performance is significantly lagging in international comparisons," commented the Munich Economic Institute.

Since the outbreak of the COVID-19 pandemic, the German economy has been underperforming, facing numerous uncertainties such as high inflation, high interest rates, and weak export demand. Niels Jansen, a senior researcher at the Kiel Institute for the World Economy, pointed out that the German economy is in a state of stagnation, with the annual GDP showing almost no growth compared to the previous year.

The Munich Economic Institute's business climate index, regarded as the "barometer of German economic development," shows that the German business climate index has dropped to its lowest level since the early days of the pandemic in [specific month and year]. Businesses are generally pessimistic about the future economic outlook. Clemens Fuest, the head of the Munich Economic Institute, pointed out, "The weakness of the German economy has become a long-term trend."

The lackluster performance of this forward-looking indicator is underpinned by the sluggishness of the manufacturing sector. Data from the German Federal Statistical Office shows that Germany's industrial output shrank by % last year, with the mechanical engineering and automotive industries particularly hard hit, becoming one of the main causes of the overall economic difficulties.

Meanwhile, Germany is experiencing a resurgence of "bankruptcy waves," with an increasing number of companies facing difficulties. The credit reporting agency "Creditreform" reported that in Germany, the number of corporate bankruptcies reached a certain figure last year, marking an increase of a certain percentage compared to the previous year.

This wave of bankruptcies is a "red signal of economic alarm," with the number of corporate bankruptcies reaching the highest level in years, warned Volker Treier, Chief Analyst at the German Chamber of Commerce and Industry.

In its annual bankruptcy case report, the "Credit Reform" company analyzed that there are some concerning economic trends emerging in Germany's manufacturing sector, such as a high proportion of companies experiencing losses and low profit margins. According to their calculations, the number of bankruptcies in German manufacturing enterprises has increased by more than % since the year.

The automotive manufacturing industry, a pillar of the German economy, is facing unprecedented pressure. From renowned car manufacturers to auto parts companies, there have been frequent reports of unsold products, production cutbacks, layoffs, and even bankruptcies over the past year. According to statistics from the credit insurance company Euler Hermes, one out of every large enterprise that went bankrupt last year was an auto parts supplier, and the situation remains tense.

Bosch has announced job cuts, and ZF plans to reduce between 10,000 and 15,000 positions in Germany. Volkswagen aims to cut more than 30,000 jobs by 2025. These layoffs not only affect corporate competitiveness but also trigger widespread protests and strike activities at the societal level.

Looking back over the past year, the economic growth rate of Germany has been at its lowest level in history. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, summarized that the prolonged weakness of the German economy is clearly accumulating deeper social and economic risks.

Amidst the convergence of internal and external challenges, the economy is under pressure with a sluggish recovery.

Weak global demand, a downturn in manufacturing, lingering effects of the energy crisis, and a shortage of skilled workers... multiple challenges are severely hampering the "engine of the European economy."

This is a photograph of industrial facilities taken at the Völklingen Ironworks site in Saarland, Germany (photo taken on [date]). Photo by Zhang Fan/This Magazine.

According to Michael Schumann, President of the German Federal Association for Economic Affairs and Foreign Trade, the primary issue hindering Germany's economic development is excessive bureaucracy, which keeps business operating costs high. For instance, registering a company in Germany takes at least days, far exceeding the average in OECD countries, and the time required to obtain a construction permit can range from months to years. The lengthy administrative processes severely limit the efficiency of business investment and development.

Moreover, the issue of long-term underinvestment in infrastructure has been widely criticized. In recent years, Germany's public investment as a percentage of GDP has consistently been below the EU average. During the Merkel administration, investment in land-based infrastructure such as roads and railways averaged only a small percentage of GDP, leading to delayed maintenance of many transportation infrastructures. Reporters from "Global" magazine have observed that for many years, Germany's railway construction has lagged, with severely aging tracks and inadequate train maintenance, making delays a norm and cancellations not unexpected. In a certain year, the average punctuality rate of German trains hit a historic low of a certain percentage. During the European Cup, numerous train delays or cancellations caused many fans to miss matches. The aging railway network, dilapidated highways, and slow internet not only do not match the image of Germany as an economic powerhouse but also further reduce transportation efficiency and increase business costs.

A critical area that is severely lacking in investment is digital infrastructure. Data from a leading German analytics company shows that there are currently only a million fiber-optic users in Germany, with fiber coverage at just .%. The Digital Economy and Society Index released by the EU indicates that Germany's levels of digital talent, digitalization of businesses, and digitalization of public services are all below the EU average.

Meanwhile, Germany's traditionally prudent fiscal policy is proving inadequate at a critical moment when the economy urgently requires large-scale investments to drive structural reforms. Zheng Chunrong, Director of the German Studies Center at Tongji University, told the Global Times that although the government has introduced some measures to promote growth, there are serious disagreements within the coalition government over expanding investments and relaxing the debt brake mechanism, which has hindered policy advancement. Additionally, the political uncertainty brought about by the upcoming German elections this month has further dampened corporate investment confidence and impeded economic development.

Germany's own economic competitiveness is also declining. Zheng Chunrong stated that Germany's traditional industries are path-dependent, with slow progress in digital and green transformation, and lagging structural adjustments. The high dependence of the German economy on traditional industries has further exacerbated its recovery difficulties. When sectors such as automobiles, machinery, and chemicals are impacted, the development of emerging industries like artificial intelligence, information technology, and new energy is significantly lagging, making it difficult to provide effective support for economic growth.

The impact of external factors has further amplified Germany's economic difficulties. The Russia-Ukraine conflict has led to a surge in energy prices, putting immense pressure on Germany's manufacturing sector and significantly weakening its international competitiveness. Meanwhile, the United States has introduced massive subsidies through the Inflation Reduction Act, attracting a large amount of investment to shift towards the US. This trend has exacerbated concerns about "de-industrialization" in Germany. As an economy heavily reliant on exports, Germany has been significantly impacted by the global trade slowdown, with the reduction in automobile exports further dragging down overall economic performance.

Helena Melnikov, the Director General of the German Chamber of Commerce and Industry, candidly stated: "Currently, high energy costs, lengthy approval processes, and a plethora of cumbersome bureaucratic procedures are all undermining the competitiveness of businesses. Germany needs to adopt more decisive structural reform measures to reduce corporate costs, cut down on bureaucracy, and accelerate the advancement of infrastructure projects to enhance the competitiveness of the German economy."

Stimulus measures hit a bottleneck, political and business circles hope for policy adjustments.

The current economic difficulties faced by Germany are the result of a combination of internal and external factors, including temporary causes and long-term issues, making it challenging to revitalize its economy. The International Monetary Fund predicts that Germany's economic growth rate will be lower than that of the United States, the United Kingdom, and France in the coming years.

To stimulate the economy, the German government announced the draft fiscal budget for the year on [specific date], along with a series of growth-promoting measures approved by the cabinet. These measures cover various aspects such as encouraging investment, reducing bureaucracy, incentivizing workers, enhancing the efficiency of financial markets, and advancing energy infrastructure.

To encourage private investment, the government has proposed extending the implementation period of the declining balance depreciation method for corporate assets to years, setting the depreciation rate at %, and increasing the depreciation limit to euros. This allows companies to obtain more tax deductions and recover their investment costs more quickly through accelerated asset depreciation.

The average annual working hours for Germans, which is equivalent to weekly hours, are the shortest among OECD member countries. Consequently, the Scholz government has proposed a "tax reduction for overtime work" measure and is encouraging delayed retirement through pension system reforms.

To address the issue of insufficient investment, the proportion of the federal budget allocated to investment will generally increase year by year, reaching a record of billions of euros by the year. The government has also proposed raising the maximum subsidies for research and development innovation for large enterprises and small and medium-sized enterprises to millions of euros and millions of euros, respectively.

Zheng Chunrong pointed out that the current issue lies in the limited fiscal funds available for investment across various sectors. "High energy prices, excessive regulation, weak infrastructure, a shortage of technical talent, insufficient raw material supply, and supply chain issues are all intertwined, leading to a lack of economic vitality in Germany... There is still great uncertainty as to whether its economic growth potential can compete with that of the United States and emerging markets."

Regarding the economic outlook for the year, the German business community generally holds a pessimistic view. A survey by the German Chamber of Commerce and Industry indicates that the German economy may further slide into recession this year, with over a million businesses expected to file for bankruptcy, significantly increasing the risk of consecutive years of economic stagnation.

The Kiel Institute for the World Economy points out that, against the backdrop of potential new tariffs by the United States, the German export industry has a "Sword of Damocles" hanging over its head. Even if the newly formed government after the election adopts proactive economic stimulus policies, their effects will take years to manifest, and there are currently almost no signs of recovery.

Analysts here believe that a significant driver of Germany's ongoing economic downturn is the manipulation of the "dependence on China" narrative by some politicians, who are attempting to reduce Germany's so-called reliance on China in key sectors. This move not only weakens the competitiveness of German companies in China but has also led to a noticeable decline in the sales of "Made in Germany" products in the Chinese market, further exacerbating economic pressures.

This imbalance is particularly evident in the automotive industry. In a given year, Porsche's sales in China dropped by a certain percentage, BMW by another percentage, and Audi by yet another percentage. Beyond automobiles, other German brands such as Adidas have also consistently underperformed in the Chinese market.

Faced with a severe economic situation, the political and business circles in Germany have begun to reflect on the rationality of their policy towards China. "Behind the poor performance of German exports is the continuous decline in product competitiveness."