Germany is still Europe's economic powerhouse, but the latest numbers from the country's economic ministry paint a worrying picture of the country's finances.

Industrial output was down 1.5 percent in June compared with the same period last year and followed a 0.5 percent decline in May.

At the same time, the powerful and traditionally profitable German automotive industry spooked markets with a 3.8 percent contraction in June after posting growth figures the previous month.

The country's construction industry was worth just short of $500 billion last year, but it shrank by almost 3 percent in June.

New construction projects are down 47 percent on the previous two years and new building permits dropped over a quarter (27 percent) in the first five months of 2023.

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Economies are an ecosystem and what happens in one industry impacts others. Civil engineer Phillip Hoffman says a multitude of factors have created a tsunami of problems for his groundworks company.

"I think our economic situation in civil engineering right now is just the beginning," he said to CGTN. "We have had about a 30 percent decline this year alone. I think we're going to bottom out in the next four to five years. By then, we will have had a drop of around 90 percent. 

"Why? On the one hand, the pandemic unsettled people and now that it is over we have rising interest rates. It's almost impossible for the average small builder with three kids or two kids to build with the high-interest rates because, at four to five percent, a mortgage is just unaffordable."

The coalition government in Berlin has been criticized by opposition parties during the summer break in German politics. The leader of the largest opposition bloc in the Bundestag took to social media, saying that those in power shouldn't be on holiday at this time.

Opposition criticism

The opposition's plan would cap electricity bills, lower taxes, and eliminate red tape that can mire business in Germany in bureaucracy.

The Free Democrats, who run the Finance ministry as part of the three-way ruling coalition, acknowledge the country is in an economic slump but say that references to Germany as the 'sick man of Europe' are unfounded.

Finance Minister Christian Linder has announced 50 new tax policies he hopes will jump-start the economy, but those at the fiscal sharp end, like Phillip Hoffmann, are unsure whether these will be enough to spark Germany's economy into life.

"I don't see any help there, neither now nor three years ago, when they should have helped," he says. "Even if you change something now or help in any way, this help would come almost too late because it would take two or three years at the earliest to take effect. By that time, we will have hit a whole new bottom. We don't feel like we'll survive until then at all.”

The German central bank, the Bundesbank, predicts a 0.3 percent total economic contraction over 2023.

There is at least some good news in the pharmaceutical sector: German companies posted 7.9 percent growth in June. But even that came off the back of a 13.9 percent drop in May.

With the automotive and construction industries continuing to struggle, the pharma sector may be required to provide Germany's ailing economy with a shot in the arm.

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