economic situation
Germany, an export nation, in a slump: “Not competitive”
Threatening US tariffs and a federal government on call: difficult times for the German economy. The latest economic data gives little hope.
Weak exports and declining production are putting the German economy in difficult waters in politically turbulent times. Germany is no longer internationally competitive as a foreign trade nation, comments the President of the Federal Association of Wholesale, Foreign Trade and Services (BGA), Dirk Jandura.
After the break of the traffic light coalition, Europe’s largest economy needs a government capable of acting as quickly as possible – also in view of the re-election of Donald Trump as US President and the threat of import tariffs in the most important sales market for goods “Made in Germany,” Jandura warned: “Germany needs an economic turnaround . We have to turn things around before the waves get too high.”
The export industry is having a hard time
After an interim high in August, companies delivered fewer goods abroad again in September. According to preliminary figures from the Federal Statistical Office, exports with a total value of 128.2 billion euros were 1.7 percent below the level of August 2024. There was also a decrease compared to September 2023 – of 0.2 percent.
Growing competition for German products on the world markets, for example from China, as well as structural problems in German industry such as energy prices, which are high compared to international standards, have been causing problems for Germany as an export nation for some time. According to the Wiesbaden authorities, from January to September of the current year, exports were 1,175.5 billion euros, 1.0 percent below the value for the same period last year after calendar and season adjustment.
Meanwhile, imports increased to 111.3 billion euros in September – this is an increase both compared to the previous month (plus 2.1 percent) and to the same month last year (plus 1.3 percent). In the nine-month period from January to September, imports to Germany totaled 988.6 billion euros, which was 4.2 percent less than a year ago.
Industrial production falls unexpectedly sharply
Production in German industry is also weakening: from August to September of the current year, total production fell by 2.5 percent, more than expected by market observers. Compared to September 2023, according to calculations by the Federal Statistical Office, the decline was 4.6 percent. The statisticians explained the setback primarily with a significant decline in production of 7.8 percent compared to the previous month in the automotive industry.
The renewed decline in industrial production in September must be seen as a warning signal for better economic policy. With exports also falling in the same month, there is no stimulus from abroad for the domestic economy, says Volker Treier, head of foreign trade at the German Chamber of Commerce and Industry (DIHK), assessing the situation. Trump’s re-election and the end of the three-way alliance of the SPD, Greens and FDP are causing further uncertainty.
Trump’s second term is a cause for concern
“The decline in industrial production and exports is a warning given Donald Trump’s victory. More US protectionism does not bode well for industrial-heavy Germany,” predicts VP Bank chief economist Thomas Gitzel.
During the election campaign, Trump announced that he would introduce high import tariffs to protect the US economy. This would make German-made goods more expensive in the most important sales market for goods “Made in Germany”. In September, the United States was once again the number one buyer for German products: exports to the USA increased by 4.8 percent to a total value of 14.2 billion euros as of August 2024. In contrast, exports to China fell by 3.7 percent to 7.1 billion euros, and exports to the United Kingdom fell by 4.9 percent to 6.4 billion euros.
Economists: Reforms in Germany are overdue
Economists are urging domestic politicians to strengthen Germany as an industrial location, for example by reducing bureaucracy. But the break in the traffic light coalition makes quick decisions less likely, as Commerzbank chief economist Jörg Krämer summarizes: “Germany is facing a difficult winter half-year without there already being a political majority for the necessary economic reforms.”
Federal Statistical Office on foreign trade Federal Statistical Office: Foreign trade 09/2024 Federal Statistical Office: Industrial production 09/2024 BGA on export figures 09/2024
dpa
Source: Stern
