“Sensitive minus”
Weak global economy weighs on German exports
October 5, 2023, 9:55 a.m
Exports “Made in Germany” are falling, German export companies have to accept a “significant loss”, reports the Federal Statistical Office. Imports are also falling – and the forecast doesn’t look rosy for the rest of the year.
The weak global economy is increasingly putting a strain on the business of German exporters. In August, their exports of goods fell by 1.2 percent compared to the previous month to 127.9 billion euros, for the second time in a row, as the Federal Statistical Office announced. In a year-on-year comparison, there was even a decrease of 5.8 percent. The monthly decline was three times as strong as economists predicted. In July there was already a minus of 1.9 percent.
“Like the rest of the German economy, exporters remain in the twilight between recession and stagnation,” said ING chief economist Carsten Brzeski, commenting on the development. The likelihood that Europe’s largest economy contracted in the just-ended summer quarter has increased with the weak export data. “The global weakness in demand is increasingly affecting companies,” added economist Bastian Hepperle from Hauck Aufhäuser Lamp Privatbank. “In addition, the order books are becoming thinner.”
VP Bank chief economist Thomas Gitzel said: “Ultimately, the weak exports should not come as a surprise, as global export volumes have been stagnating for two years now.” German industry, with its high proportion of foreign customers, is suffering from this. “Exports were already clearly in decline in July, and now we have to accept a significant decline in August too.”
Imports weaker than expected
Imports also surprisingly fell: they fell by 0.4 percent to 111.4 billion euros. Economists surveyed by the Reuters news agency had expected growth of 0.5 percent. “This means that trade is no longer the strong, resilient growth engine of the German economy that it once was, but rather a brake,” said Brzeski.
Exports to EU countries fell by 1.5 percent in August compared to the previous month to 69.6 billion euros, while other foreign business fell by 0.9 percent to 58.3 billion euros. The USA remained the number one buyer country: goods worth 13.3 billion euros were sold there, a decrease of 1.3 percent. Exports to China, on the other hand, increased by 1.2 percent to 8.4 billion euros. Exports to Great Britain fell by 4.2 percent to 6.0 billion euros.
Another minus expected for September
There is no rapid improvement in sight: The Kiel Trade Indicator from the Institute for the World Economy (IfW) signals a further decline in both exports and imports for September. In addition, the mood in the export industry is currently worse than it has been in over three years. The barometer for export expectations fell to minus 11.3 points in September, from minus 6.5 points in August, according to the Munich Ifo Institute. “The export economy is in a phase of weakness,” said the head of the Ifo surveys, Klaus Wohlrabe. One reason for this is that many central banks have raised their key interest rates significantly in the fight against inflation. This drives up financing costs. “The rise in interest rates worldwide is having an effect,” said Wohlrabe. “They dampen demand for German goods.”
German exports had already fallen in July. According to the German Chamber of Commerce and Industry (DIHK), the reason for this was primarily the “weak” demand from abroad – also because of the “eroding competitiveness” of Germany as a location.