Germany must prepare for modest economic growth: The prospects for the German economy appear modest, but there is light at the end of the tunnel. It is time for transformative supply-side policies to increase scarce resources.

Germany must prepare for modest economic growth: The prospects for the German economy appear modest, but there is light at the end of the tunnel. It is time for transformative supply-side policies to increase scarce resources.

According to a report from amp2.handelsblatt.com, leading economic research institutes predict that the German economy will grow by just 0.3 percent in 2023. This modest forecast is the new normal and not a temporary blip. The German economy is going through a phase of shortage, particularly in terms of labor. Demographic changes are leading to a shortage of skilled workers, and many industries are already struggling to fill vacancies.

As a financial expert, I analyze the impact of this low economic growth on the market and the financial industry. The expected development means that companies can no longer expect annual growth of several percentage points. This has a direct impact on investments and corporate spending. Companies may need to adjust their profit and revenue expectations and adjust their financial planning accordingly.

In addition, scarce resources such as labor become a critical factor. Companies face the challenge of finding and retaining qualified employees. This can lead to rising labor costs and increased competition for workers. Companies may need to invest in training and development programs to upskill and retain their employees over the long term.

Politics also plays an important role in dealing with this situation. The transformative supply policy, as proposed by Economics Minister Robert Habeck, could be an approach to optimize the scarce supply of workers. This includes measures such as skilled immigration and the promotion of longer working hours. Politics should also create incentives for companies to convert their production to climate-neutral technologies. By increasing the price of climate-damaging behavior and introducing green lead markets, companies can be motivated to choose more environmentally friendly options.

Overall, it is crucial that the German economy and the financial sector are flexible and adaptable in order to adapt to this new era of modest economic growth. Companies should rethink their business strategy and perhaps reorient their investments and expenses. Politicians should focus on sustainable structural reforms in order to increase scarce resources and support the transformation to climate neutrality.

Source: Amp2.handelsblatt.com – Germany has to get used to modest economic growth