Germany’s economy will struggle to grow this year

Significance

GDP appears to have remained flat, quarter-on-quarter, in January-March, while there was a significant fall in industrial production in March and in investor confidence over the last three months. The second and third readings for the quarter could see growth revised downward, which would mean a technical recession, following negative growth in the final quarter of last year.

Impacts

• How to address the economic downturn will create tensions between the governing parties, especially the Greens and Free Democrats.
• The persistence of inflation will benefit the two right-wing parties, the Christian Democratic Union and the Alternative for Germany.
• Productivity challenges could make Berlin more open to Chinese investment in green technologies in Germany.