Expectations are rising significantly: German export industry more optimistic than ever

Expectations are rising significantly
German export industry more optimistic than ever

According to the IFO Institute, the German export industry is “not yet developing great momentum,” but the mood has since improved significantly. Several sectors are expecting significant growth. However, business with China will be more difficult.

German industry is more optimistic about its foreign business than it has been for over a year. The barometer for its export expectations rose to plus 0.3 percent in May, after being at minus 1.5 points in April, as the Munich-based IFO Institute announced in its business survey. This is the highest value since April 2023.

“Positive and negative responses almost balance each other out,” said Klaus Wohlrabe, head of the IFO surveys, summing up the results. “The export industry as a whole is not yet developing great dynamism.” The development varies greatly in the individual sectors. Drinks manufacturers, for example, are expecting a significant increase in export business. “The same applies to the furniture industry and to the production of glass and ceramics,” said the IFO Institute.

Manufacturers of data processing equipment, on the other hand, had to cope with a noticeable setback. The very optimistic expectations from the previous month could not be maintained. “There is little movement in the mechanical engineering and automotive sectors at the moment,” the IFO researchers also found. The textile and clothing industry, the printing industry and the metal industry are expecting a decline in their exports.

Strong demand from the USA

Foreign trade boosted the German economy in the first quarter. Exports of goods increased by 2.1 percent from January to March compared to the previous quarter – not least due to strong demand for “Made in Germany” goods from the USA. This contributed to gross domestic product growing by 0.2 percent in the first quarter, thus preventing a recession in Europe’s largest economy.

However, the German Chamber of Industry and Commerce (DIHK) expects business to stagnate overall in 2024. The Chinese market, for example, has become more difficult. “China has climbed the ladder of the value chain and is increasingly producing more complex goods itself that it previously imported from Germany,” said Commerzbank economist Vincent Stamer. “In addition, German companies are increasingly producing locally instead of exporting goods from Germany to China.”

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