2021-10-05 23:58:04 Fears of a ‘bottleneck recession’: How shortages are hurting Germany.

Fears of a ‘bottleneck recession’: How shortages are hurting Germany.

In Germany, where one in every four jobs is dependent on exports, the global supply chain crisis is weighing heavily on the country’s economy, which is Europe’s largest and a linchpin for global commerce.

Recent surveys and data point to a sharp slowdown in Germany’s manufacturing powerhouse, prompting economists to forecast a “bottleneck recession.”

Almost everything that German factories require to function is in short supply, including plywood, copper, aluminum, plastics, and raw materials such as cobalt, lithium, nickel, and graphite, which are critical components of electric car batteries.

In an August survey conducted by the Association of German Chambers of Industry and Commerce, more than 40% of German companies said they had lost sales due to supply issues. According to the European Central Bank, if not for supply bottlenecks, exports in Europe would have been 7% higher in the first six months of the year.

While every economy in the world is affected by shortages, Germany is particularly vulnerable due to its reliance on manufacturing and trade. Exports of automobiles, machine tools, and other goods account for nearly half of Germany’s economic output, compared to 12% in the United States.

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Fears of a ‘bottleneck recession’: How shortages are hurting Germany.