Germany, the European economic powerhouse, is facing a recession as the value of the Euro has fallen against the US Dollar. There is a fear of loss of jobs in this situation. An evaluation agency has mentioned in its latest report that various German companies started the process of layoffs in 2022.

Fitch Ratings Inc., the US-based credit rating agency, has stated in its report that the recession could intensify, if the Government of Chancellor Olaf Scholz does not pave the way for more debt for AAA-rated companies. Else, a number of industries and corporate houses in the world’s fourth-largest economy could adopt the policy of layoffs yet again.

The US and its Western allies imposed a series of economic sanctions on Russia after the Russian troops invaded Ukraine on February 24, 2022. In response, the Vladimir Putin Administration in Moscow stopped supplying gas to Europe. After that, the value of the Euro began to fall against the US Dollar. A senior official of Donetsk Bank has stated that the effects of the recession have been gradually increasing in Germany since the country recorded negative growth in the fourth quarter of 2022. The number of layoffs, too, has been increasing since then. According to the official, the value of six important global currencies, including the Chinese Yen, also decreased compared to the US Dollar in the third week of May 2023.

Meanwhile, India is worried about Germany’s recession. The Indian export industry is of the opinion that sales of products made in the South Asian country, such as shoes, garments and leather goods, which have a large market in Germany, might decline in the coming months. It could further drag down the overall Indian exports. The prolonged Russia-Ukraine War, steep price hikes and sustained interest rate hikes by top banks have already dampened demand in global markets. Its impact is evident in exports. A section of experts has warned that exports could suffer not only in Germany, but also in entire Europe.

Data shows that Germany imported various products, including appliances, electronic products, including smartphones, clothes, bio-chemicals, footwear, leather products, iron and steel products, automobile components, etc., from India in the last financial year (2022-23).

Sharad Kumar Saraf, a Mumbai-based exporter and Chairman of Technocraft Industries, has said that India’s export to Germany stood at USD 10.2 billion in 2022-23. However, it could see a fall because of the long-term recession in Germany, he added. According to Saraf, the most affected sectors would be leather products, chemical and light engineering items. He stressed: “This is going to affect Indian exports not only to Germany but Europe as a whole since other countries are also already in recession.” For his part, Apparel Export Promotion Council (AEPC) Chairman Narendra Goenka stated that the recession in Germany would affect order flows into India. “Business will be down by at least 10%. This slowdown will definitely impact the investment flow from Germany,” he stressed. Meanwhile, Yogesh Gupta, the Regional Chairman (Eastern Region) of Federation of Indian Export Organisations (FIEO), has claimed that since Germany is the main growth driver for the European Union, recession in that country will impact the purchasing there. “However, it is too early to comment on the impact of the recession on Indian exports,” he added.

It may be noted that India exported machinery (worth USD 1.5 billion); electronics (USD 1.2 billion), including smartphones (USD 458 million); apparels (USD 990 million); organic chemicals (USD 822 million); footwear (USD 332 million); leather goods (USD 305 million); articles of iron and steel (USD 474 million) and auto components (USD 406 million) to Germany in 2022-23. Germany is one of the 20 countries that use the Euro currency.

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Published by Koushik Das

Koushik Das (born on May 16, 1976 in Kolkata) is a career journalist. Based in the Indian capital of New Delhi, Koushik writes mainly about foreign policies and current geopolitical issues, and rarely about other topics. His own political ideas are highly influenced by Antonio Gramsci, Louis Althusser, Michel Foucault, Michael Oakeshott and others. English philosopher and political theorist Oakeshott (Dec 11, 1901-Dec 19, 1990) says that “in political activity, men sail a boundless and bottomless sea. There is neither harbour for shelter nor floor for anchorage, neither starting-place, nor appointed destination. But we have to keep afloat”. (Rationalism in Politics, 1962) As a student of Political Science, Koushik loves to share his views on issues, which have great impacts on his thought process (and also on India, South Asia and of course on the global community), with his readers through his website – Boundless Ocean of Politics. By doing so, he tries to keep himself afloat. You will find some of his articles in https://inserbia.info/today/ (https://inserbia.info/today/author/kou_das13_i/), as he has been trying to assess the global geopolitics since 2003. You can also mail him at kousdas@gmail.com View all posts by Koushik Das