Industry constitutes the largest share of the German economy compared to many other countries, and the sector in most parts consumes energy intensively. This means that German companies were greatly affected by the rise in energy prices, which last year recorded the highest levels in Europe.
Because of high electricity prices, more German companies have begun moving to the United States, and energy-intensive industries such as metals, paper, ceramics, and glass are dying and may disappear completely as an industry in Germany.
After the outbreak of war in Ukraine, Germany ended its dependence on Russian gas, as German Economy Minister Robert Habeck announced in March 2022 that his country quickly severed its relations with Russia in the field of energy, and seriously pledged to abandon Russian gas completely by 2024.
On the other hand – according to the Turkish “Para Analyz” website – it turns out that liquefied natural gas coming from the United States is much more expensive than from Russia, and the increasing fuel prices have led to a sharp rise in electricity prices, while the production of wind turbines and other solar cells is minimal.
Fertilizer instead of gas
But it seems that Germany has replaced Russian fertilizer with gas, and while it previously imported 5% of the required fertilizers from Russia, this percentage has now risen to approximately 20%, according to the same site.
Berlin’s purchases of Russian fertilizers increased by 334% after abandoning gas, but on worse terms, given the fact that the cost of producing fertilizer ranges between 80% and 90% compared to gas and energy.
According to International Monetary Fund estimates, Germany this year will be the only country in the Group of Seven whose economy will not grow but will shrink, as consumer prices broke records (only 6.2% in August), while industrial production declined rapidly, inflation and public loans rose, and fell. Business activity is at its lowest levels in the past three years.
The German economy was damaged
Former German Chancellor Angela Merkel once warned that economic cooperation with Russia was necessary, and stressed that sanctions against Russia would harm Berlin more than Moscow.
Other German politicians – according to the Turkish website – repeat Merkel’s position, as the German Member of Parliament for the Left Party, Sevim Dagdelen, told the “Berliner” newspaper that there is an opinion “that punishing Russia will have a lasting effect, but the reality was different, as the Russian economy is recovering and Western sanctions are in place.” “It strikes its perpetrators.”
Large and medium-sized German companies – surrounded by political restrictions on all sides – still cautiously hope that everything will return to normal, according to the Turkish website.
The Turkish website quoted the head of the German Institute for Economic Research, Marcel Fratzscher, as saying that high energy prices “will remain a clear competitive disadvantage for Germany in the coming decades,” explaining that political leaders and companies “will need to compensate for these costs by increasing innovation and productivity.”
Jan Hildebrand, deputy editor-in-chief of “Handsblatt”, Germany’s first economic newspaper, said in an interview with Al Jazeera that the pressures on the German economy will be great in the medium term, given its fundamental dependence on industry that needs large amounts of energy and open markets, at a time when countries are moving… They are important markets for German goods due to economic protectionism.