“Europe and the world should once again view Germany with admiration rather than bewilderment,” proclaimed Friedrich Merz in the video message announcing his candidacy for the chancellorship in the country’s upcoming elections. Merz, whose center-right Christian Democratic Union is comfortably leading the polls, added that, if elected, he would devote all his energy to creating “a Germany we can be proud of once again.”
Like many of his right-wing contemporaries across the West, Merz is evoking a vision of renewal as an antidote to growing concerns over relative decline. And for Germany, these concerns are not without merit. The German Economy Ministry’s official forecast for 2024 predicts a 0.2 percent contraction, following a 0.3 percent decline in output the previous year. This would mark Germany’s first two-year recession in over two decades and make it the only major advanced economy to contract during this period. There is mounting fear that the once-lauded “German model” is increasingly losing its steam, raising anxieties that Germany may once again be perceived as the “sick man of Europe.”
While numerous factors contribute to the current economic malaise, the decisions made by German leaders on how to address these challenges will have far-reaching implications, given Germany’s role as the economic powerhouse of Europe. With current Chancellor Olaf Scholz having lost his vote of confidence last week, paving the way for snap federal elections in February, the challenges facing the German economy are set to dominate the forthcoming debates on the nation’s future direction. Beyond discussions of short-term stimulus measures, however, Germany will likely need to undertake a comprehensive restructuring of its economic model to remain competitive in an increasingly dynamic and evolving global economic landscape.