German economy cannot avert recession - Deutsche Bank Chief warns -

Berlin: In the wake of the Russia-Ukraine conflict, the process of globalisation has come to a standstill. Besides, there is no possibility of its recovery. At the same time, there is a risk of fuel shortage and inflation is also likely to continue. The head of Deutsche Bank, Christian Sewing, warned that due to these factors, the German economy is expected to go into recession and it is impossible to avoid it. At the same time, Sewing has appealed that the German economy largely depends on China and that the German government should try to reduce this dependence. A few days ago, the German study group ‘Institute for Employment Research (IAB) had predicted that the German GDP would fall by 1.7% in the next year and nearly two hundred and fifty thousand people would lose their jobs.

Against the background of the Russia-Ukraine conflict, fuel prices in Germany have flared up and electricity supply has also been limited. It has already been warned that Germany may not have enough natural gas reserves for the winter due to Russia’s cut in fuel supplies. Due to this, rationing of fuel and energy has started in Germany and there is severe dissatisfaction in the industrial sector and the general public. Senior officials and analysts are indicating that the serious effects of this displeasure will be felt in Germany soon. Against this backdrop, Sewing’s warning becomes noteworthy.

At the ‘Banking Summit held in Frankfurt, Germany, the head of Deutsche Bank made his predictions regarding the German economy. Sewing emphasised that in the last few decades, predictions regarding the global economy were made based on certain factors. But the Russia-Ukraine conflict has ended this certainty. Geopolitical tensions have hampered globalisation and it isn’t easy to reverse the process. Global supply and value chains have been disrupted. Difficulties are also being faced in the labour market. Due to the scarcity of fuel and energy, the prices of all products are increasing drastically. Due to this, inflation has flared up in Europe as well. Considering all these factors, Germany cannot avoid the recession crisis.’

At this time, the head of Deutsche Bank also drew attention to German dependence on China. Eight per cent of Germany’s exports and 12% of its imports depend on China. Sewing warned that while reducing fuel imports from Russia is important, it is also essential to reduce dependence on China. The head of Deutsche Bank also claimed that the tension created between the United States and China threatened the German economy.

Due to Corona, the Russia-Ukraine conflict and the ongoing decline in the Chinese economy, exports of countries like Germany, France and Italy, which are the leading economies of Europe, have been hit. For the past few months, the manufacturing sector in Europe has also been declining and the index of this sector has gone to the lowest level since February 2021. Analysts have already claimed that the growing extent of the energy crisis, rise in inflation, impact on production and exports, and the fall in the Euro currency along with the stock markets are all indications that the European Union’s economy is at risk of going into recession. A warning from the head of Deutsche Bank seems to confirm it.