The deindustrialization of Germany is not a day or two. It's a bit of a pile-up.
Last month, the German manufacturing PMI recovered to 45.4, and the services PMI hit an 11-month high.
In 2023, 176,000 companies in Germany will disappear from the market. Only 11% of these bankruptcies are due to bankruptcy. Most companies close quietly and automatically. There is also an increasing number of industrial manufacturing companies among these companies.
The disappearance of construction companies, chemical companies, technical service providers, mechanical engineering, automobile manufacturing and electrical manufacturing companies has a greater impact on the overall economy, but is often overlooked by the public.
With superb technology, strict quality control, and keen market insight, there is no shortage of mainstays in the German manufacturing industry. However, the strong German manufacturing industry has always had obvious disadvantages, such as high costs and lack of flexibility, which have been masked during the period of rapid development.
Against the backdrop of high inflation, high interest rates and a sluggish global economy, Germany, the eurozone's largest economy, is in economic contraction.
Look at Germany's own response: BASF, the world's largest chemical company, plans to reduce its production in Germany and move it to China. BASF said it was profitable last year everywhere except Germany. BASF management cites high energy costs and bureaucracy in Germany as the two main reasons why the company is no longer as profitable as it used to be.
With the rise of trade protectionism, German exports are facing great difficulties. Germany's strategy is to expand its market share with the help of the European Union.
But what should Germany do if the EU market has shrunk?
Germany has long lived in the protected area of the European Union, and the rate of technological progress has gradually decreased, and the products have given people the feeling of an old dragon clock.
For example, the automotive industry is the backbone of the German manufacturing industry. The electrification process in the European market has not gone as smoothly as expected, and restrictions such as the preference of local brands and tariffs provide some protection for German manufacturers.
The good news is that while the German economy is not back on track and the manufacturing sector is still in an unsettling contraction, the services sector has managed to gain a foothold. The main driver of Germany's economic growth is the services sector, which is accelerating further with strong growth in new business. It is worth noting that after 12 months, the new overseas business of the service industry has reappeared, although the growth rate is still relatively limited.
