Foreign trade
Exports are shrinking significantly – structural crisis instead of slump
The headwind for Germany’s exporters continues on the world markets. Experts fear that exports could continue to be a growth driver for even longer.
A major setback for Germany’s exporters: In October, companies delivered significantly fewer goods abroad. Exports shrank by 2.8 percent to 124.6 billion euros in September, as the Federal Statistical Office in Wiesbaden announced. That was the sharpest decline this year. Exports also fell by 2.8 percent compared to the same month last year.
Exports to the USA, the largest target market for German exports, fell by a good 14 percent month-on-month to 12.2 billion euros. At the same time, exports to China fell by 3.8 percent. In trade with EU countries, exports fell by 0.7 percent.
The BGA industry association is alarmed. “Our exports are not competitive and there is no demand for imports. We have a real crisis in Germany. Not temporary, but structural,” says BGA President Dirk Jandura, commenting on the figures. If countermeasures are not taken quickly, there is a risk of immense welfare losses and massive job cuts. Jandura called for a modernization of customs and further advancement of the Mercosur agreement with South America.
After ten months of the current year, German foreign trade has total exports of 1.3 trillion euros, which corresponds to a decline of 1.2 percent compared to the same period last year. Imports shrank by 3.6 percent to 1.1 trillion euros during this period. In October, imports fell by 0.1 percent compared to September. The bottom line was that there was a surplus in the foreign trade balance of 13.4 billion euros.
DIHK foreign trade chief Volker Treier no longer believes that the export engine will start up quickly. German industry is in a serious structural crisis and has lost international competitiveness. Treier says: “There will be no export growth this year. At best, stagnation is to be expected for the coming year.”
No contribution to growth
The Bundesbank does not expect a slight recovery in the export industry until next year. However, the competitive environment remains difficult and the pressure to adapt is high, so that German exporters are likely to grow more slowly than the global market, according to a report published on Friday. Exports will likely contribute less to economic growth than in previous recovery phases.
Foretaste of trade conflicts with Trump
The start of the fourth quarter does not bode well with the minus in October, wrote VP Bank chief economist Thomas Gitzel. “Even if the significant decline in exports to the USA is likely to be characterized by large orders, the decline gives a foretaste of what could happen in the event of serious customs disputes with the USA.”
The mood in the German export industry had recently improved slightly. “Companies are unsettled, but are still waiting to see what trade policy Trump will ultimately implement,” says Klaus Wohlrabe, head of surveys at the Ifo Institute. “In addition, the dollar has appreciated significantly after the election, from which exporters can benefit.”
Growing competition on the world markets from China, for example, as well as structural problems in German industry such as expensive energy and a lot of bureaucracy have been troubling Germany as an export nation for a long time. Exports had already fallen in September.
According to the Ifo survey, the metal industry is still the most affected. Companies in the automotive industry are also expecting lower exports. Food and beverage manufacturers are doing best and are expecting increasing exports.
dpa
Source: Stern
