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“We are not the sick man of Europe,” Sewing said in his keynote address at the Handelsblatt Banken Summit 2023 on Wednesday, “but it is also true that there are structural weaknesses that hold back our economy and prevent it from developing its great potential.”
“We will become the sick man of Europe if we do not address these structural issues now,” he added.
The Deutsche Bank CEO said that the biggest task lies with banks, whose roles are changing in the current macroeconomic climate.
“We are more in demand than ever as risk managers and advisors. This is a great responsibility, but also a great opportunity to create new trust,” Sewing said.
“[We] must not deceive ourselves: we are still lagging behind our international competitors, even if the special economic situation caused by interest rates currently glosses over this somewhat – more for some institutions, less for others,” he added.
Sewing also listed other issues contributing to Germany’s image as the “sick man,” including high and unpredictable energy costs, slow internet connections, outdated rail networks, digitalization backlogs, a lack of skilled workers, excessive bureaucracy and long approval procedures.
There has been much debate in recent months as to whether Germany deserves the moniker, which was first used to describe Europe’s largest economy in 1998 as it navigated the expensive challenges of a post-reunification environment.
Many of the factors challenging the German economy are considered global headwinds, Peter Oppenheimer, chief global equity strategist and head of macro research EMEA at Goldman Sachs, told CNBC Tuesday.
“The predicament that the economy is facing at the moment is really down to a number of factors,” Oppenheimer told CNBC, with challenges in the manufacturing sector, a disappointing China reopening boost and higher energy costs contributing to the recession in Europe’s largest economy.
“It’s … not a deep recession but it’s obviously been more hit by obvious headwinds,” Oppenheimer said.
Germany fell into a technical recession in the first quarter of the year as GDP growth was revised down from zero to -0.3%. A number of institutions have since forecasted further shrinkage in the German economy, including the Bundesbank and the International Monetary Fund.
Original news source Credit: www.cnbc.com