Germany declared ‘sick man of Europe’ as US and UK economies develop
Economists are declaring Germany because the “sick man of Europe” because of its weakened post-pandemic economic system, whereas the US and UK present indicators of renewed gross home product (GDP) progress.
Last week, America’s GDP grew by 2.1 p.c for the second quarter of the 12 months, in keeping with the Bureau of Economic Analysis.
While this got here in beneath expectations, it far outpaces the GDP progress of different G7 economies, corresponding to Germany.
The coronary heart of the European Union (EU) posted zero progress for the second quarter of 2023 because the economic system contracted by 0.2 p.c year-on-year.
It is not only the US economy that’s besting Germany’s economic system because the UK’s Office for National Statistics (ONS) revised its preliminary forecasts to estimate that GDP was 0.6 p.c greater than earlier than the pandemic.
Originally, the ONS estimated that the UK’s economy was nonetheless 1.2 p.c smaller than its pre-pandemic measurement within the final three months of 2021.
With this modification, the UK is probably going now not the worst-performing economic system in Europe since lockdown.
Earlier this 12 months, the International Monetary Fund (IMF) forecast that Germany’s economic system would shrink in 2023.
If this prediction had been to happen, this could be the worldwide energy and the one G7 nation to see its economic system contract this 12 months.
The nation fell right into a technical recession within the first quarter of 2023 and skilled two consecutive quarters of unfavourable GDP progress.
Thomas Pugh, an economist at RSM, broke down why Germany’s economic system is probably going being outplaced by different European nations.
He defined: “Turns out the UK isn’t such a laggard after all. Revisions to GDP growth in 2020 and 2021 mean that rather than being about 0.2 percent smaller than its pre-pandemic size, the UK economy may actually be about 1.5 percent bigger.
“Admittedly, this would still mean that the UK is still near the back of the G7 pack, but it would be ahead of Germany and the gap between the UK and the rest of the G7 looks significantly smaller.”
ING’s international head of Macro and chief economist Carsten Brzeski contextualised the US economic system’s efficiency towards its European counterparts.
Mr Brezenski added: “Sure, the US economy has been holding up better than we thought. And yes, the eurozone economy grew again in the second quarter.
“Gradually retreating headline inflation should at least lower the burden on disposable incomes.
“And let’s be thankful for the build-up of national gas reserves in Europe, which should allow us to avoid an energy supply crisis this winter unless things turn truly arctic.
“But that’s about as upbeat as I can get. We still predict very subdued growth to recessions in many economies for the second half of the year and the start of 2024.”