The German economy is being severely weakened by shocks on both demand and supply sides

The German economy ha s now weakened significantly , which is not surprising because Germany has been hit by: A negative demand shock, due to the global decline in demand for cars and industrial capital goods and the sharp rise in German household savings; A negative supply shock, due to the decline in Germany’s cost competitiveness, leading to a significant decline in Germany’s market share in global trade. Germ any is therefore being weakened on both the demand side and the supply side . Moreover, this weakening will persist into the long term , as correcting it will require a change to the country’s productive specialisation (capital goods, cars), a correction of its precautionary savings and an improvement in its cost competitiveness.