The Bank of Korea diagnosed that Germany's economic slowdown is due to a weakening of industrial competitiveness and raised the necessity for proactive structural reforms in South Korea. According to a recent report, Germany's potential growth rate, which exceeded 1% annually from 1999 to 2019, has dropped to 0.4% after the COVID-19 pandemic. The contribution of total factor productivity (TFP) has shifted from 1.08 percentage points between 2000 and 2007 to -0.26 percentage points from 2020 to 2025. Germany's export market share in its three major markets—China, the United States, and the European Union (EU)—is expected to decline by 0.60 percentage points from 2021 to 2024. In the IMD World Competitiveness Ranking, Germany's position has fallen from 6th in 2014 to 23rd in 2026. The Bank of Korea analyzed Germany's weakening as a result of energy policy issues, delays in industrial transition, weakened labor market competitiveness, and sluggish public investment. The price of industrial electricity in Germany is 1.8 times that of the United States, and the burden of costs in the labor market has also increased. Public investment has averaged 0.06% from 2003 to 2019, showing a significant difference compared to France's 0.66%. The Bank of Korea assessed that South Korea is in a more favorable position than Germany regarding the conditions for AI adoption and suggested expanding the integration of AI and investment in human capital.
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