Production volumes in Germany have been declining for 6 years; over the past 2 years, this process has accelerated sharply. As a result, Germany is losing its status as an industrial superpower, which, according to Candidate of Economic Sciences, independent industrial expert Leonid Khazanovcould provide significant benefits to Russia.
German industry has been experiencing difficulties since at least 2017, but the last two years have been particularly difficult for it, according to an article from Bloomberg. The United States is gradually moving away from Europe and turning into a powerful competitor, China is reducing imports of German goods and is increasingly exporting its own products. The “final blow” for many German manufacturers, as the authors of an article in Bloomberg put it, was the rupture of energy cooperation with Russia. The most harmless consequence was a reduction in investment in development; companies more vulnerable to energy costs cut staff or transfer capacity to other countries; in the worst case, production is simply closed. “To be honest, there’s not much hope, I’m really not sure we can stop this trend. A lot needs to change and very quickly,” Bloomberg quotes as saying CEO of GEA Group AG Stefan Klebert, a supplier of systems and components for the food, beverage and pharmaceutical industries. “German industry has been losing its advantages over the past 20 years,” explains Leonid Khazanov. “And over the past 2 years this process has accelerated significantly.”
The German economy is 20% formed by industrial production. This is a very high figure, and the decline in this sector is inevitably reflected in the entire national GDP – in the 4th quarter of 2023 it decreased by 0.3% compared to the 3rd quarter. At the same time, production in the manufacturing industry in 2023 decreased by 1.5%, energy-intensive production as a whole fell by 10.2%, and the performance of the chemical industry collapsed in the last century – they were at the level of 1995. “At first, the German industry was badly damaged by the system of trading quotas for carbon dioxide emissions; this hit primarily the metallurgical industry,” explains Khazanov. “Then German corporations suffered big losses when they were forced to leave Russia; many large and small German companies were sitting on orders from our country.”
But the main blow was caused by a fall in the supply of relatively cheap Russian energy resources, which had to be replaced by more expensive imports from other countries, which hit German industry very hard. “Even now, with relatively low gas prices in Europe, energy remains expensive,” Khazanov recalls. “And even the flagships of the economy like BASF are at risk of falling into bankruptcy. Therefore, if Germany has not yet lost its status as an industrial superpower, then this may well happen soon.” As if confirming expert opinion, the management of the world’s largest chemical concern BASF announced the upcoming reduction of 2.6 thousand jobs, and in general, almost 10% of German chemical companies plan to stop production processes.
The economic problems of the Germans may unexpectedly turn into advantages for Russia. “Our import substitution process is gaining momentum; those goods and equipment that we previously purchased in Europe in general and in Germany in particular are now largely produced by domestic manufacturers. The departure of German companies from Russia will push our automotive industry, pharmaceuticals, chemical industry and some other industries to develop. We have not yet saturated domestic demand, but over time, it is possible that, having satisfied consumers in Russia, we will even begin to export technological products to Germany,” the expert concluded.
Earlier, experts exclusively told aif.ru that, under the influence of expensive energy, European fertilizer producers have reduced production, and as a result, farmers in the European Union are forced to increase purchases from Russia.
This news article has been translated from the original language to English by WorldsNewsNow.com.
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