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German officials insist their economy doesn’t merit the “sick man of Europe” label, but a new study suggests illness is really playing a part in its poor performance.
Gross domestic product would have risen 0.5 per cent last year if it hadn’t been for work absences due to poor health — a tally that surpassed pandemic totals to reach a record in 2023, according to analysis by VFA, Germany’s association of research-based pharmaceutical companies.
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Some €26 billion (US$28.2 billion) in real income was lost due to illnesses among employees — equivalent to about 0.8 percentage point of total output, economists Claus Michelsen and Simon Junker wrote in a report released on Jan. 26. High levels of absences in November and December point to another hit in the current quarter too.
The German economy shrank 0.3 per cent in 2023, its worst performance in two decades barring the financial crisis year of 2009, and 2020, when the pandemic hit. Its underperformance compared to regional peers was so pronounced that it evoked the “sick man of Europe” label previously used to describe it a quarter century ago.
Bundesbank president Joachim Nagel has rejected the comparison, and last week, Finance Minister Christian Lindner insisted the country was more like a tired man just needing coffee.
“In 2023, Germany was the ‘sick man’ in the truest sense of the word — its economic performance was significantly more affected by the wave of illness than in other countries,” Michelsen and Junker wrote. “What’s still true though is that Germany’s economy faces significant structural problems and is confronted with major challenges in international competition.”
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Germany the 'sick man of Europe' after all as illness cripples economy - Financial Post
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