By FLAVIO AGUIAR*
From robust giant to problem child
Recently Christoph Swonke, economist, researcher and linked to the Deutsche Zentral-Genossenschafts Bank, known as DZ-Bank, declared that Germany has become “the new problem child among European countries”. In other words: for him, the German economy is ceasing to be the flagship of the European economy, to hinder it with its internal problems.
What is happening?
On Wednesday of last week, October 9, the German Economy Minister and Vice Chancellor, Robert Habeck, from the Green Party, declared that for the second year in a row the country's economy would shrink. In 2023 it shrank by 0,3%. Now the forecast is that in 2024 it will shrink by another 0,2%.
Faced with the adverse domestic situation, with rising energy and food costs, falling consumption and a lack of investment, German companies are turning abroad for help, at the expense of their assets. Deutsche Bahn, a German railway company and once one of the darlings of European transport, is struggling with cash flow and performance. As a result, it has decided to sell its profitable freight subsidiary, Schenker, to Denmark's DSV for 14 billion euros (around R$85 billion) in order to balance its cash flow.
Comerzbank, the country's second-largest private bank, has sold part of its assets to Italian bank Unicredit. Unicredit has expressed interest in acquiring the entire German bank, and the European Central Bank has already given the green light for this possible transaction.
Other companies are considering seeking more attractive locations. Chemical company BASF has decided to invest 10 billion euros to set up a plant in China.
The Swiss owners of the medium-sized energy company Techem are considering selling it to the US company TPG.
Volkswagen has announced plans to close production plants, partly due to competition from Chinese cars, and has broken a 30-year-old wage agreement with its union that protected jobs and wages.
An additional problem has arisen with Germany's decision to partially and temporarily break with the so-called Schengen agreement, reinstating police controls on passports and vehicles at its land borders. Businessmen whose companies are located near the Polish border and employ workers from that country say they are concerned about the difficulties in movement this will cause.
As Germany is still the largest economy on the continent, and the main importer and exporter of products, its internal problems affect the whole of Europe. The general climate is one of apprehension and negative expectations for the coming times.
To alleviate the situation, Minister Robert Habeck predicted that Germany will return to growth from next year, announcing the adoption of measures to reduce bureaucracy in the relationship between government and companies and the search for a new electricity generation program considered climate neutral.
But the difficulties are not small. Since 1980, successive governments have announced their intention to reduce bureaucracy in that relationship, with results considered unsatisfactory.
In addition, the general climate in global trade, finance and productive investment markets is also one of apprehension and caution, due to the war in Ukraine and the clashes in the Middle East, with Israel's armed action expanding in the region.
Last but not least, environmental groups are expressing grave concern about the growing resistance from industrial and agricultural entrepreneurs to green initiatives, which they consider unprofitable and harmful in the face of foreign competition. Germany and Europe as a whole could go from being leaders in the sector to new problem children when it comes to preserving the planet.
* Flavio Aguiar, journalist and writer, is a retired professor of Brazilian literature at USP. Author, among other books, of Chronicles of the World Upside Down (boitempo). [https://amzn.to/48UDikx]
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