Frightening comment from the Bundesbank for Germany

The German Central Bank (Bundesbank) reported that German exporters have lost significant share in global markets due to their weakening position in international competition. The Bundesbank's May economic report has been published. The report indicated that with the decline in the competitiveness of the German economy, German exporters have lost significant global market share since 2021. The report emphasized that the market shares of German exporters remained almost constant until 2016 following the 2008 financial crisis, and concluded, "Germany's export market shares have been declining since 2017 and especially since 2021." The Bundesbank report noted that competitiveness has declined in many sectors, stating that more than three-quarters of the country’s export market share losses between 2021 and 2023 were due to worsening supply-side conditions that made domestic exporters less competitive internationally. The report noted that the decline in competitiveness points to fundamental structural challenges challenging many companies in the German economy, stating, “These include demographic change, a shortage of skilled workers, rising unit labor costs, and increasing bureaucracy.” The report noted that energy-intensive sectors such as mechanical engineering, electrical engineering, and the chemicals sector are the sectors that contribute most to the decline in competitiveness, with rising energy prices and supply chain disruptions also negatively impacting the situation. The report noted that Germany is performing worse than other developed economies in the global market, adding that China is increasingly becoming a competitor to German companies. The report called for urgent reforms to improve Germany's business environment, such as increasing work incentives and tax breaks for private investments, and reducing barriers to skilled immigrants, bureaucracy, and energy costs.