Demand from the USA and the EU is falling
German export trade is weakening
7/4/2023 9:26 am
Interest in goods “Made in Germany” is declining: German exports fell short of expectations in May with a minus of 0.1 percent. The declining demand from the USA “is particularly important”, explain economists and expect a difficult second half of the year.
German exports surprisingly fell in May due to falling demand from the EU and the USA. They fell by 0.1 percent compared to the previous month to 130.5 billion euros, as reported by the Federal Statistical Office. Economists, on the other hand, had expected growth of 0.3 percent. Compared to the previous year, the decline was even more pronounced at 0.7 percent. Imports, on the other hand, increased by 1.7 percent to 116.1 billion euros.
“But this once again confirms the suspicion that nothing will come of an economic recovery for the time being,” commented the chief economist at VP Bank, Thomas Gitzel, on the flagging export business. Europe’s largest economy has recently shrunk for two quarters in a row – mainly because of the reluctance to buy among consumers suffering from falling real incomes.
“Declining impulses from the USA are particularly important,” commented the chief economist at Hauck Aufhäuser Lampe Privatbank AG, Alexander Krüger, on the negative development in exports. “As of now, the export sector will record another quarterly decline.” Exports to the EU countries fell in May by 1.5 percent on the previous month to 70.3 billion euros.
The USA remained the number one buyer country: Goods worth 12.7 billion euros were sold there, a drop of 3.6 percent. Exports to China, on the other hand, grew by 1.6 percent to 8.6 billion euros, those to Great Britain even increased by 5.8 percent to 6.4 billion euros. Exports to Russia fell by 7.4 percent to 0.7 billion euros because of western sanctions as a result of the war against Ukraine. From January to May, German exports totaled 659.3 billion euros, an increase of 4.5 percent compared to the same period last year.
However, exporters are facing a difficult second half of the year. The barometer for expectations in the export industry fell to minus 5.6 points in June, after plus 1.0 point in May. This is the lowest value since November 2022, as the Munich IFO Institute announced in its monthly company survey.
“In addition to the domestic demand weakness, fewer orders from abroad are now emerging,” said Klaus Wohlrabe, head of the IFO surveys. “This is not good news for the German export economy.” The global interest rate hikes dampened demand for products “Made in Germany”. The order cushion is getting thinner and thinner.