Germany Economy Shudders As Deutsche Bank And Other Faces Upheaval
German economy hits slow growth due to the country’s behemoth corporate names hits upheaval. In the past few weeks, Deutsche Bank announced that it is exiting from the global equity business and BMW chief executive said he is stepping down from the position. Another shook down was witnessed when Daimler AG and BASF SE issued a profit warning second time in one month.
The setback to Germany Inc was added when Bayer AG witnessed legal trouble with the acquisition of Monsanto, the maker of weed killer Roundup. While the challenge of German automakers to dominate the global market continues to drop down the economic boost. Meanwhile, software maker SAP SE and industrial giant ThyssenKrupp AG announcement of cutting down thousands of jobs combined the shudder to the economy.
The whole scenario is a mix of profit warnings, restructuring the firms, and legal disputes that have made the German’s most valuable companies to fallout from their position. Ernst and Young, the leading consulting firm say that “German companies are losing their importance.”
In addition, Germany’s trade dispute and an increase in the pressure to digitize after years of robust growth has shaken the economy. “There is a crisis at the moment. The German economy was so good for such a long time, people thought we’d go on and go on and go on,” said Markus Schön, managing director of DVAM Asset Management in Detmold, Germany.
German’s economy grew up by 0.7% in these twelve months that is far behind if compared to European countries. The collapse of diesel cars after the diesel scandal has hit them in a time when they are spending heavily in the development of electric and autonomous cars.
“It can be an advantage to have a strong CEO, who can react quickly in times of crisis,” said Christian Lawrence, a partner at consulting firm Brunswick Group in Munich. “Whereas if you have a German system, the CEO is one of many making decisions and there must be consensus for things to be done,” the WSJ reported.
Ernst and Young also conveyed that there are no considerable German companies who are competing in the digital world. In the area of digitization, there is no Facebook or Amazon in Germany.