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Struggles of German Economy


Sanctions imposed against Russia don’t cause losses just to Russia. As it turns out, after the first three months of this year, the German economy is considerably weaker than expected.

These sanctions, along with the euro crisis, affect Germany as well. As Federal Statistics Office said, German gross domestic product (GDP) rose only by 0.3 percent in the first quarter, which is not in compliance with predicted growth of 2 percent by the end of the year.

Both Russia and Germany suffer because of the sanctions. As Vladimir Grinin, the Russian ambassador to Germany said, sanctions stopped Russian investments across Europe. Before 2014, Russia represented a very important German export market, but the worth of German goods and services sold in Russia, has been progressively falling since 2013 (35.8 billion euros in 2013 and 29.3 billion euros in 2014). The difference between the trade turnover between these two countries in 2013 and 2014 is 9,33 billion euros, in the favor of 2013. Negative trend continued in 2015.

When the year of 2014 was coming to its end, German experts had predicted the economic growth of 0.5 percent. Their prediction was not correct. Experts were deceived by the fact that, as a result of higher wages and the satisfying rate of employment, German households increased their spending.

In addition to that, the government increased investments in construction and technical equipment. However, what experts didn’t take into account is the fact that along with the significant decrease in export trading, Germany started to import much more than during the previous years.

German economic struggles are confirmed by the fact that German GDP rose by 1.6 percent in the last quarter of 2014, while in the first quarter of 2015, GDP rose by 1.1 percent.

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