IT was a surprise for some that German gross domestic product (GDP) growth dropped to zero percent in the second quarter. At Lundgreen's, we were not surprised — this is not to say 'look, we were right' as nobody in the financial markets gets it right all the time. The key is that we have pointed at underlying weak development in the German economy since before the Covid-19 crisis. We argue that the macro problems that are now becoming obvious in Germany have been developing for several years. It makes the swamp much worse than what is priced in the stock market by the investors.

Back in the first quarter of 2020 when the Covid-19 pandemic exploded, German unemployment was at a record low but GDP growth was moving very close down toward zero. At the time it was a situation where all alarm bells should have been ringing. Nobody called for action and all of a sudden, Covid-19 took over and the crisis was not managed away from a deeper economic crisis but instead into it. What followed was Russia's invasion of Ukraine and the inflation crisis.