Thanks to the boom in China: German exports continue to catch up

Thanks to the special boom in China
German export continues to catch up

Despite the renewed lockdown, the economy can apparently emerge from the crisis year 2020 without any problems. In November, exports rose for the seventh time in a row compared to the previous month. Germany is benefiting from the increasing demand from China.

In November, German exports grew for the seventh month in a row, despite the second Corona wave with tightened restrictions at many trading partners. The booming China business in particular caused exports to rise by an unexpectedly strong 2.2 percent compared to the previous month, as the Federal Statistical Office announced. Economists polled by Reuters had only expected 0.8 percent, after 0.9 percent in October. Despite the race to catch up, exports remained 4.7 percent below the level of February 2020 – the month before the corona-related restrictions began.

For the Corona year 2020 there is a clear decline overall. In the first eleven months of last year, exports fell by 10.3 percent to 1103.9 billion euros compared to the same period in the previous year. The industry association BGA recently expected an export decline of at least twelve percent for the year as a whole. In 2019, Europe's largest economy had exported goods worth more than 1.3 trillion euros.

"Apparently, despite the lockdown, the economy got away with less than one black eye in the fourth quarter," said Bankhaus Lampe's chief economist, Alexander Krüger. "Exports to China in particular are booming," said VP Bank's chief economist Thomas Gitzel, one reason for this. These grew by 14.3 percent in November 2019 to 9.3 billion euros. "China is benefiting from a special corona economy," said Gitzel.

The demand for German cars is increasing there, while German mechanical engineers are also in demand with their products. "Once again it is clear that if China is doing well, Germany will benefit," said the economist. The chances are not bad that foreign business will continue to pick up. The export-dependent industry collected more orders from home and abroad for seven months in a row, with demand from the euro zone increasing particularly significantly recently.

Imports are also catching up

The recovery of the global economy from the recession year 2020, predicted by many experts, should also play into the cards of exporters. Imports grew by 4.7 percent in November and are only 0.6 percent below the pre-crisis level of February. Meanwhile, the companies increased their production, also in view of the full order books in the industry than before the crisis broke out in February 2020. The entire production – industry, construction and energy suppliers together – increased according to the Federal Ministry of Economics by 0.9 percent compared to the previous month. Here economists had expected 0.7 percent, after 3.4 percent in October.

"The outlook for the industrial economy remains cautious in view of the pandemic and the tightened lockdown, but the order situation and the mood in companies have recently improved," said the ministry. "This suggests that, unlike in the spring of last year, the industry is less affected by the measures."

The industry's production expectations for the coming months have recently deteriorated somewhat. The corresponding barometer fell to 4.5 points in December, after 5.6 in November, according to the Ifo Institute's business survey. "The picture in the sectors is very different. Production cuts are rarely planned, however," said Ifo expert Klaus Wohlrabe.