Germany Bearing Brunt of Global Slump - West's Trade Body

Germany's energy security has been undermined by the sabotage of the Nord Stream 1 and 2 gas pipelines and by broader economic sanctions on Russia. Now reduced global demand for its industrial products threatens to deepen the recession.

The West's international trade organization has predicted Germany will suffer the worst amid a world economic downturn this winter.

The Paris-based Organization for Economic Cooperation and Development (OECD) said Germany would be the only G20 country apart from Argentina to go into recession this year.

The intergovernmental organization, whose members include the 27 European Union states, the UK, US, Canada, Mexico, Japan, South Korea, Australia, and New Zealand, said Germany's heavy industry-dominated economy would be hit hardest by a global decline in demand and rampant inflation.

The OECD predicted worldwide economic growth of three percent this year, falling to 2.7 percent in 2024.

“You’re seeing weaker growth across all of Europe, but Germany is probably the largest example. You’re seeing the impact of inflation on real incomes," said OECD chief economist Clare Lombardelli. "That’s been suppressing consumer demand. And you’re seeing impact of monetary policy tightening."

The OECD also said the UK, which formally left the German-dominated EU in 2021, would see the highest inflation rate among the G7 countries this year at 7.2 percent. But it forecast that this would drop to 2.9 percent in 2024, and that Britain would see a meager 0.8 percent growth in its GDP next year, up from 0.3 percent in 2023.

Germany has suffered economically from Western sanctions on Russia, its biggest energy supplier and a major trade partner. The bombing of the Nord Stream 1 and 2 gas pipelines has further jeopardized German energy security.

Higher interest rates, ostensibly aimed at cutting inflation, have also had a dampening effect on the economy. Last week, the European Central Bank (ECB) raised its base lending rate to four percent, the highest level since the adoption of the common euro currency by most EU members in 1999.