The German business model no longer works as smoothly as before. This has not only something to do with rising prices and disrupted supply chains. The coming months will be a difficult tightrope walk.
Maybe it won’t be as bad as feared? The high inflation, the uncertain energy supply, the feared recession here in Germany? At least many economists are no longer quite as pessimistic about the future as they were a few months ago.
But is there really a reason to be alarmed? It’s far too early for that, says Carsten Brzeski from ING Bank: “We shouldn’t just sit back and relax just yet. We really still have to get through this winter and will probably still have major economic challenges in winter 23/24.”
Ukraine war has changed the economic situation
The invasion of Russian troops into Ukraine in February 2022 changed a lot. Also for us here in Germany. The cheap gas deliveries from Russia were over for the time being. Many raw materials and preliminary products became scarce and expensive. There were delivery problems. Producing “just in time” became a big challenge.
All of this had been hinted at in previous years, but the war in Eastern Europe made the changes more obvious. The “German business model” – as we have known it so far – no longer works as smoothly as it used to.
The fact that the large, international corporations were still able to make solid profits despite these difficult conditions is due to the fact that increased costs were passed on to customers. Losses in one area were offset by growth in other regions. Whether this can continue is not a foregone conclusion.
Structural Change and Turning Points
We are experiencing a turning point” is probably the most frequently quoted sentence by Federal Chancellor Olaf Scholz this year. “And that means the world after isn’t the same as the world before.” What we are currently experiencing is structural change across the board. Such a structural change is initially associated with losses, says Andreas Scheuerle from DekaBank.
That means you have production facilities that are being devalued and qualifications that you no longer need. This means that people and the economy will first be affected before the fruits of this structural change can be harvested. If you were able to adapt to this structural change.
Companies have to rethink
Many companies are reacting this year: they are rethinking their production processes. In addition, there is a lack of skilled workers everywhere, and issues such as climate protection and sustainability are becoming more important.
And as far as trade relations are concerned – they will also change a lot, believes Ralph Solveen from Commerzbank: “We will certainly see regionalization in the next few years, perhaps even more trade between friendly countries.” But that’s not good news, says Solveen. Because global trade relations have kept prices low. And many companies have benefited from this.
“Now there may be other advantages, a reduction in dependencies and the like. You just have to be clear about this – in the end, this supposed security will also be expensive,” says the Commerzbank expert. Nevertheless, there are also opportunities associated with this – opportunities to reposition yourself