Can Germany do structural reform?

GERMANY is the only major country in the world whose economy is set to contract in 2023. But there is a real risk that the downturn is not a temporary phenomenon. Instead, it points to an altered funda­mental long-term outlook for the country.

For Germany’s own sake, as well as for the sake of the rest of Europe, one can only hope that decision-makers will act with resolve now. They should view this crisis as an opportunity to address, at long last, the long list of structural challenges that have piled up over the past two decades.

As the Allianz Pulse 2023 survey indicates, German participants assess the current economic situation as worse than even during the height of the Covid-19 pandemic in 2020 or following Russia’s invasion of Ukraine in 2022. The fact that the geo-economic framework is currently shifting to Germany’s dis­advantage is only being realised with some delay.