HAMBURG (dpa-AFX) - The economists at credit insurer Allianz Trade < DE0008404005> do not expect an easy time for the German economy in the longer term after the mild recession year 2023. "In addition to the gloomy short-term outlook, the medium-term prospects are also worrying," according to a "Country Risk Atlas", in which the Allianz subsidiary examines and assesses the economic situation in 83 countries worldwide.

"In addition to high energy costs, the headwind for the German economy is mainly due to weak global demand, particularly for highly cyclical goods such as cars, machine tools and chemicals," the chapter on Germany states. "In addition, the one-sided global growth of services compared to goods is causing problems for the German economy."

Allianz Trade cites a whole bundle of structural challenges facing the German economy, including labour shortages, high energy costs, a high regulatory and tax burden, creeping digitalization and political uncertainty.

Beyond the already difficult economic environment, Allianz Trade sees further uncertainty for companies and households in the federal government's budget crisis. Following the Constitutional Court's ruling on the budget, the federal government has "struggled to find a consensus on priorities for the 2024 budget, as it must comply with the debt brake and consolidate its structural balance until at least 2024", according to the credit insurer's economists.

"If the austerity measures do not deliver what they promise, this could lead to a decline in gross domestic product of around 0.3 percentage points by 2024 and potentially prolong the recession in an already very weak environment, as this would impair competitiveness and torpedo a catch-up effect in public and private investment."

In this context, Allianz Trade speaks of a "fiscal impasse". This underlines "the need to prioritize investments to the same extent as current consumption and to find a way to finance the necessary investments in the coming years"./kf/DP/zb