G ömling, Michael
A icle
The Cu en Economic Si ua ion in Ge many in he Con ex
o P e ious C ises
In e economics
Sugges ed Ci a ion: G ömling, Michael (2025) : The Cu en Economic Si ua ion in Ge many in he
Con ex o P e ious C ises, In e economics, ISSN 1613-964X, Sciendo, Wa saw, Vol. 60, Iss. 1, pp.
55-59,
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ZBW – Leibniz In o ma ion Cen e o Economics 55
S uc u al ChangeDOI: 10.2478/ie-2025-0011
In e economics, 2025, 60(1), 55-59
JEL: H11, D70, H50
Michael G ömling
The Cu en Economic Si ua ion in Ge many in
he Con ex o P e ious C ises
This a icle places he cu en economic s agna ion in Ge many in he con ex o p e ious c ises
since 1991. In e ms o dep h, he cu en mac oeconomic c isis, esul ing om he pandemic and
geopoli ical uphea als, has al eady exceeded he le el o all h ee p e ious c ises, in some cases
conside ably. In o de o e u n o he g ow h pa h expe ienced in he las h ee decades, annual
economic g ow h o 2.5% o he nex six yea s is necessa y. The e a e se ious doub s abou
whe he he Ge man economy will e u n o i s p e ious pa h o p ospe i y.
Michael G ömling, Ge man Economic Ins i u e (IW),
Cologne; and IU In e na ional Uni e si y o Applied
Sciences, Cologne, Ge many.
© The Au ho (s) 2025. Open Access: This a icle is dis ibu ed unde he
e ms o he C ea i e Commons A ibu ion 4.0 In e na ional License
(h ps://c ea i ecommons.o g/licenses/by/4.0/).
Open Access unding p o ided by ZBW – Leibniz In o ma ion Cen e
o Economics.
Ge many’s economy s agna ed in 2024, and i s economic
ou pu has emained mo e o less a he le el o 2019, i.e.
he le el be o e he majo economic bu dens associa ed
wi h he COVID-19 pandemic and he Russian in asion o
Uk aine. The ou look o 2025 signals con inued s agna-
ion. This means ha Ge many is expe iencing i s longes
pe iod o economic inac i i y in he las se en decades. In
2023 and 2024, signi ican declines we e eco ded in he
manu ac u ing and cons uc ion indus ies (Figu e 1).
The cons uc ion indus y is su e ing om high inancing
and cons uc ion cos s as well as weak in es men ac i i y
o e all. The high cons uc ion cos s e lec he ma e ial and
ene gy p oblems, as well as high egula o y cos s. In addi-
ion, in he wake o he wa - ela ed ene gy p ice shock and
associa ed high in la ion, in e es a es ose signi ican ly.
The manu ac u ing c isis can be a ibu ed o se e al
pa ly mu ually ein o cing causes (G ömling, 2024a):
Weak global economy. The geopoli ical con lic s a e ha -
ing a di ec nega i e impac on in e na ional in es men
ac i i y. The high in la ion a es esul ing om ene gy
p ice shocks caused by he wa ha e also weakened con-
sump ion wo ldwide. This global slump is dampening o -
eign demand o Ge man indus ial goods and expo s.
In he majo indus ial sec o s in Ge many, o eign sales
accoun o a ound wo- hi ds o business.
Weak domes ic demand. In addi ion o weak ex e nal de-
mand, he e is a mac oeconomic in es men c isis in Ge -
many. The cons uc ion ecession has led o a signi ican
d op in demand o indus ial in e media e goods and
cons uc ion-speci ic capi al goods. In addi ion, he no-
able ise in inancing cos s is dampening gene al in es -
men ac i i y and hus an impo an pa o he Ge man
indus ial spec um.
Unce ain ies. The geopoli ical uphea als a e ha ing a di-
ec impac no only on global in es men ac i i y. Ra he ,
he poli ical unce ain ies a e also c ea ing a business
en i onmen cha ac e ised by economic imponde ables.
In addi ion, unce ain ies in he con ex o clima e policy
and he condi ions o ans o ma ion and, abo e all, he
unclea economic policy cou se in Ge many a e causing
cau ion and es ain among companies and consume s.
The end o he Ge man go e nmen coali ion in No embe
2024 and he an icipa ed ou come o he elec ion in ea ly
2025 a e con ibu ing o economic policy unce ain y.
Loss o compe i i eness. Las bu no leas , he compe i-
i e posi ion o in e na ionally o ien ed companies has
de e io a ed, which in u n is cu bing demand o indus-
ial goods ia he o eign ade channel and he p open-
si y o in es domes ically. As a esul o he mul iple cos
shocks caused by he sha p ise in ene gy p ices, highe
aw ma e ial p ices and highe p oduc ion cos s due o
global logis ical p oblems and highe labou cos s, Ge -
man indus y has los p ice compe i i eness. Added o
his is he app ecia ion o he e ec i e exchange a e o
he eu o agains a numbe o in e na ional compe i o s.
Figu e 1 shows ha he se ices sec o has so a p o-
ided an economic coun e balance. In he i s hal o
In e economics 2025 | 1
56
S uc u al Change
Figu e 1
Sec o al b eakdown o economic de elopmen in
Ge many
Seasonally, p ice- and wo king day-adjus ed g oss alue added; index:
4 h qua e 2019 = 100
Sou ces: S a is isches Bundesam ; au ho ’s own calcula ions.
Figu e 2
Long- e m economic de elopmen in Ge many
Seasonally, p ice- and wo king day-adjus ed GDP; index: 1991 = 100
Sou ce: Fede al O ice o S a is ics; au ho ’s own calcula ions.
2024, he p ice-adjus ed g oss alue added in his sec-
o , which accoun s o a ound 70% o o al economic
ac i i y in Ge many, was 1.6% highe han in he p e i-
ous yea . The e was g ow h ac oss he en i e spec um
o he se ice economy – in business se ices and con-
sume - ela ed se ices as well as in he public and social
sec o s. The posi i e income end esul ing om wage
inc eases and no malising in la ion a es as well as ex-
pansi e go e nmen ac i i y a e cu en ly bene i ing he
Ge man se ice sec o . Ne e heless, his end is a
bes su icien o compensa e o he declines in manu-
ac u ing and he cons uc ion indus y.
Cyclical and s uc u al explana ions
The a gumen s ci ed o he cu en manu ac u ing c i-
sis ex end beyond he poo cyclical si ua ion, as cyclical
ac o s pa ly o e lap wi h long- e m s uc u al shocks.
The pandemic and he cu en geopoli ical uphea als
show ha economic shocks can also igge changes in
he sec o al s uc u e o an economy (G ömling, 2021).
Concep ually, he business cycle e e s o luc ua ions in
he u ilisa ion o a gi en p oduc ion po en ial. The p o-
duc ion po en ial desc ibes he o e all economic p o-
duc ion possibili ies o an economy wi h a no mal u i-
lisa ion o i s p oduc ion ac o s. Capaci y u ilisa ion is
measu ed by g oss domes ic p oduc (GDP), i.e. he ac-
ual olume o goods and se ices p oduced. S uc u al
shocks (in addi ion o neu al echnical p og ess and
ac o accumula ion) ha e a di ec in luence on he le el
and composi ion o he p oduc ion po en ial.
F om a s uc u al poin o iew, geopoli ical changes and
adjus men bu dens ha e been causing an economic e-
o ien a ion and igge ed a new discussion abou he isk
o deindus ialisa ion (G ömling e al., 2023). This dis-
cussion ela es o he medium- o long- e m signi icance
o p e iously amilia sales ma ke s, he eliabili y o in-
e na ional supply chains and logis ics sys ems, he sup-
ply o aw ma e ials and ene gy and, las bu no leas ,
he in e na ional ans e o knowledge. The es ic ions
expe ienced as a esul o he pandemic (see G ömling,
2021) a e being exace ba ed by new ensions and unce -
ain ies due o he changing geopoli ical clima e.
I emains o be seen wha long- e m adjus men bu -
dens he new US adminis a ion will impose on he global
economy and Ge many. Added o his a e he di ec ad-
ap a ion bu dens o companies esul ing om clima e
change and poli ical ans o ma ion goals. The acu e
de e io a ion in compe i i eness mus also be seen in a
long- e m con ex . The quali y o a business loca ion is
in luenced by a a ie y o condi ions – such as he a ail-
abili y o skilled wo ke s, ene gy supply, he a ious in-
as uc u es – and by he undamen al economic policy
o ien a ion.
Cu en c isis in he con ex o o me business cycles
This a icle places he cu en economic si ua ion in he
con ex o p e ious c ises in Ge many since 1991 (G öm-
ling, 2024a). Figu e 2 shows he de elopmen o p ice-
adjus ed GDP on he basis o annual alues wi h he ou
c ises: he c isis ollowing he euni ica ion boom om
1992, he s agna ion c isis om 2001, he global inancial
ma ke c isis o 2008/2009, he COVID-19 pandemic and
geopoli ical c isis om 2020. The aim and subjec o his
a icle is o p o ide a simpli ied me hod o assessing
he cu en economic si ua ion agains he backg ound
o he economic c ises ha ha e occu ed in Ge many in
he las h ee decades. The du a ion and dep h o hese
c ises can be seen in Figu e 3.
Manu ac u ing
Cons uc ion
Se ices
GDP
105
100
95
90
85
80 I II III IV
2019 2020 2021 2022 2023 2024
I II III IV I II III IV I II III IV I II III IV I II
150
120
110
100
90
80
130
140
160
1993
1997
2001
2005
2009
2013
1991
1995
1999
2003
2007
2011
2015
2019
2023
2017
2021
euni ica ion boom
om 1992
S agna ion c isis
om 2001
Global inancial ma ke c isis
2008/2009
and geopoli ical
c isis om 2020
COVID-19 pandemic
C isis ollowing
ZBW – Leibniz In o ma ion Cen e o Economics 57
S uc u al Change
Figu e 3
Du a ion and dep h o economic c ises in Ge many
Seasonally, p ice- and wo king day-adjus ed GDP; index: qua e wi h
he las peak = 100
No es: The de elopmen o seasonally, p ice- and wo king day-adjus -
ed GDP is shown on he basis o qua e ly igu es om he na ional ac-
coun s. The ime se ies a e indexed o he qua e be o e he s a o a
ecession. The i s qua e o 2020 hus ma ks he s a o he mac oeco-
nomic ecession and, acco dingly, he ime se ies begins wi h he ou h
qua e o 2019.
Sou ces: Fede al O ice o S a is ics; au ho ’s own calcula ions.
In e ms o he o e all economy and qua e ly igu es, he
slump in he wake o he co ona i us pandemic was he
sha pes o da e, ollowed by he decline du ing he global i-
nancial ma ke c isis in 2009. The p e-c isis le el was nea ly
eached ela i ely quickly du ing he COVID-19 c isis in he
eigh h qua e . Figu e 1 has al eady shown ha he e has
been no economic mo emen since hen, howe e . In con-
as , he o e all economic eco e y o p e-c isis le els ook
a much longe ime du ing he inancial ma ke c isis and he
s agna ion c isis, a e which a sus ained up u n se in.
Compa ison wi h a e e ence pa h
When assessing a ecession based on he p oduc ion
olume be o e he ou b eak o he c isis, i is assumed
ha a e u n o p e-c isis le els is conside ed no mal o
a ma e o cou se. On he o he hand, i is no aken in o
accoun ha economic li e would ha e con inued o de-
elop wi hou he c isis and would p obably no ha e e-
mained a he le el o he qua e be o e he c isis. Fo his
eason, a coun e ac ual economic de elopmen is com-
pa ed wi h he ac ual economic de elopmen o es ima e
he alue added losses associa ed wi h he co ona i us
pandemic (G ömling, 2024b). Fo he pu pose o his anal-
ysis, an economic en i onmen was assumed in which he
pandemic and he wa in Uk aine, he Middle Eas c isis
and he associa ed geo-economic adjus men bu dens
do no exis . To de i e such a coun e ac ual cou se, o
example, economic de elopmen can be ex apola ed
a a pace ha is based on he economic momen um o
he pas . Long- e m o ecas s can also be used ha we e
made be o e he c ises occu ed.
Figu e 4 shows he ac ual de elopmen o seasonally,
p ice- and wo king day-adjus ed GDP o he pe iod
1991-2023. In addi ion o he da a shown in Figu e 2, his
ime se ies was upda ed wi h a o ecas o he yea 2024
(Ba d e al., 2024). Secondly, Figu e 4 shows a g ow h
pa h, which can be in e p e ed as a e e ence pa h o
ouble- ee de elopmen – e en hough pas c ises also
in luence he o e all dynamics o his g ow h pa h. The
e e ence pa h in Figu e 4 is based on a e age g ow h o
he o e all economy o he pe iod 1991-2019. The cu en
c isis pe iod om 2020 onwa ds is no aken in o accoun
he e, o he wise he a e age g ow h would be educed by
0.15 pe cen age poin s. Figu e 4 shows ha he ac ual
de elopmen has always e u ned o his e e ence pa h
a e he h ee p e ious c ises in Ge many.
A end line could also be used as an al e na i e o his
linea pa h analysis. Wi h a linea end, he economic e -
e ence is measu ed on he basis o equal annual changes
in absolu e e ms, wi h co espondingly lowe a es o
change in he end pa h o e ime. The app oach chosen
he e, on he o he hand, is based on a de elopmen pa h
wi h cons an pe cen age changes, which comes close o
an exponen ial end. A end wi h a Hod ick-P esco il e
(Hod ick & P esco , 1997; an Ru h, 2010), in which a e y
high smoo hing pa ame e is used, also comes close o
his app oach. The smoo hing pa ame e “penalises” he
ex en o which he end de ia es om he o iginal ime
se ies. The smalle he smoo hing pa ame e is selec ed
o he HP il e , he close he end app oxima es he
o iginal se ies and he mo e he end akes c isis e ec s
and cyclicali y in o accoun . This should explici ly no be
106
98
96
92
90
88
100
104
108
94
102
Du a ion in qua e s
1 3 5 7 9 110 2 4 6 8 10 12 14 1613 15 17 18 20 2219 21 23 24
1992
2001
2008/2009
2020
Figu e 4
G ow h pa h and ac ual economic de elopmen in
Ge many
Ac ual de elopmen o seasonally, p ice- and wo king day-adjus ed G DP
(index: annual a e age, 2020 = 100) and g ow h pa h
No e: The e e ence g ow h pa h is based on a e age g ow h o he o e -
all economy in he pe iod om 1991 o 2019 wi h ex apola ion o 2030.
Sou ces: Fede al O ice o S a is ics; au ho ’s own calcula ions.
115
85
65
105
125
75
95
1993
1997
2001
2005
2009
2013
1991
1995
1999
2003
2007
2011
2015
2019
2023
2017
2021
2025
2029
2027
GDP
Fo ecas 2024
Pa h 1991-2019
In e economics 2025 | 1
58
S uc u al Change
Table 1
Economic c ises in Ge many: Du a ion, dep h and
eco e y
No e: Compa ison wi h he le el o he g ow h pa h. G ow h pa h based
on he ac ual annual a e age change in he o e all economy in he pe iod
om 1991 o 2019. 1 Du a ion in yea s un il he g ow h pa h is eached
again. 2 Sum o he annual pe cen age de ia ions o he ac ual alues o
GDP om he g ow h pa h. 3 A e age annual g ow h in eal GDP (in pe -
cen ) equi ed o e u n o he g ow h pa h a e he espec i e c isis.
Sou ce: Au ho ’s own calcula ions.
C isis a e
euni ica ion
boom om
1992
S agna ion
c isis
om
2001
Global
inancial
ma ke c isis
2008/2009
Pandemic
and geopo-
li ical c isis
om 2020
Du a ion in
yea s
15 3 8 5
Dep h o
he c isis 2-4 -4 -16 -23
Pace o
eco e y
31.8 1.7 2.1 2.5
he case wi h he app oach chosen he e; ins ead, an o e -
all undis u bed coun e ac ual de elopmen is chosen as
a e e ence – om which, in u n, a delibe a ely chosen
s eady p og ess in p ospe i y can be de i ed.
Unde wa e pe iods in Ge many
By compa ing he ac ual de elopmen and he e e -
ence g ow h pa h, he economic “unde wa e ” pe iods
can be seen and measu ed o he economy as a whole.
The compa ison makes clea how long and how deeply
economic de elopmen has dipped below he g ow h
pa h de ined he e. This also e eals an ou pu gap wi h
he co esponding implica ions o mac oeconomic in-
come gene a ion. This app oach allows conclusions o
be d awn abou he in ensi y o economic c ises.
Table 1 documen s he leng h o ime (in yea s) i ook
o e u n o he g ow h pa h. The speed o eco e y a -
e eaching he p e-c isis le el is also ele an . The ex-
en o he c ises is he sum o he annual pe cen age
de ia ions o he ac ual alues om he g ow h pa h and
shown as a pe cen age ( ounded alues o ull pe cen -
ages). When assessing he cu en c isis, i is impo an
o bea in mind ha his c isis is no ye o e and ha i
is he e o e no ye possible o de e mine he inal ou -
come. The da a o he pa h analysis includes he com-
ple e yea 2024 based on a o ecas (Ba d e al., 2024).
In gene al, i should be no ed ha he assumed linea
de elopmen as a coun e ac ual e e ence always pos-
es a g ea e challenge compa ed o o he o wa d-look-
ing end me hods.
In e ms o he dep h and he associa ed de ia ion o
he economy as a whole om he g ow h pa h ha has
been in place since 1991, he cu en si ua ion has al-
eady exceeded he le el o all h ee p e ious c ises, in
some cases conside ably. As a as he du a ion and i-
nal impac on he economy as a whole is conce ned, i
emains o be seen how long he cu en c isis will las
and hus how a he gap o he linea end will widen.
The inancial ma ke c isis ollows a a dis ance. In e ms
o bo h du a ion and dep h, he euni ica ion c isis and
he s agna ion c isis we e much less o a bu den on he
Ge man economy.
Pace o eco e y
In o de o classi y he economic c ises, his pa h anal-
ysis can also be used o de e mine he pace o eco -
e y equi ed o e u n o he usual g ow h pa h om
he cu en c isis and o o e come he unde wa e pe-
iod (G ömling, 2024a). The pa h based on he g ow h
a e age om 1991 o 2019 was ex apola ed o 2030 in
Figu e 4. I should be no ed ha he eco e y phases in
he pas we e occasionally in e up ed, p omp ing he
beginning o a new eco e y. A a mac oeconomic le el,
an a e age g ow h a e o 1.7% o 2.1% pe yea was e-
qui ed in he p e ious c ises in o de o close he gap o
he pa h (Table 1). An abo e-a e age pace was neces-
sa y, pa icula ly o esol e he inancial ma ke c isis.
In e ms o he economy as a whole, a pe manen an-
nual economic g ow h a e o 2.5% o he nex six yea s
is necessa y o e u n o he g ow h pa h. This appea s
o be a a ge ha is almos impossible o achie e. The
g ow h po en ial o he Ge man economy is likely o be
se e ely cu bed by demog aphic ends and a lack o
quali ied employees in he coming yea s. Added o his
a e he adjus men bu dens esul ing om he geopo-
li ically necessa y es uc u ings and deca bonisa ion.
The e a e he e o e se ious doub s ha he Ge man
economy will e u n o he pa h o p ospe i y expe i-
enced be ween 1991 and 2019 in he nea u u e.
Decisi e changes a e needed i he Ge man economy is
o u n a ound and emba k on a pa h o eco e y and
g ow h a all. A eal deescala ion o geopoli ical ensions
including he wa s in Uk aine and he Middle Eas and
la en con lic s, i.e. g owing na ionalism in he Eu opean
Union, e i o ial con lic s in he Indo-Paci ic, he impac
o he new US adminis a ion on he wo ld economy, is
an essen ial geoeconomic game change . The eliabil-
i y o well-es ablished ma ke s would be s eng hened;
he in e na ional di ision o labou would be s abilised
h ough us wo hy supply chains and e ec i e aw
ZBW – Leibniz In o ma ion Cen e o Economics 59
S uc u al Change
ma e ial and ene gy supplies; and he isk o pa alysing
p oduc ion and cos shocks would be educed. Cu -
en unce ain ies in he business en i onmen would
also be diminished. This chain o e ec s would inc ease
he chances o a sel -sus aining global in es men and
ans o ma ion cycle – which is good o he global com-
muni y bo h economically and ecologically. In addi ion,
eliable economic policy in Ge many mus se iously ad-
d ess and p omo e he quali y o he business loca ion.
In e na ionally o ien ed axes, egula ions and inno a ion
condi ions as well as e ec i e go e nmen in es men is
necessa y o s eng hen compe i i eness. Unce ain ies
o companies due o clima e change i sel , bu abo e all
due o unclea condi ions o he ans o ma ion, a e a
b ake ha mus be emo ed.
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