The US has taken the German economy "in the pincers", Gabor Steingart, an economist at Focus, noted. A revival is possible only if Germany finds a way to loosen its dependence on the US.
The German economy fell into the trap set by the US. Steingart believes that the US is likely to make its economy stronger by weakening its main rivals - the EU and China. Germany, as the engine of the eurozone’s economy, will be the first to face difficulties.
The German economy is also in dire straits because of the US Inflation Reduction Act. Whilst inflation in the US is gradually slowing down, Germany is still struggling to tame it. This is why German manufacturers and businesses are going through hard times. American companies, on the contrary, have a competitive advantage. In addition, German producers have to reconsider their cooperation with China due to US sanctions imposed on Chinese semiconductors.
"Under the current conditions, the German economy has a powerful competitor in the face of the United States. In Washington, the era of 'free trade' has given way to an era of 'managed trade'," Steingart said.
Earlier, analysts at the Ifo Institute warned that rising oil and gas prices would take a heavy toll on the German economy in the period from 2021 to 2023. Real income loss over these three years is expected at almost €110 billion, or 3.0% of Germany's annual economic output.
