Surprising recovery in the midst of crises: Germany’s exporters surprisingly increased at the start of the second quarter. After a mixed start to the year, exports in April grew by 1.2 percent compared to March to 130.4 billion euros, as reported by the Federal Statistical Office. At the same time, imports fell by 1.7 percent on the previous month to 112 billion euros. The gains in exports came as a surprise to economists. Exports had still shrunk sharply in March. However, experts were cautious in view of the weakening global economy.
Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce (DIHK), spoke of a glimmer of hope. However, the increase in exports in April is “by no means a turnaround for German foreign trade”https://www.sueddeutsche.de/wirtschaft/.”The heavy loss of the previous month and the previously rather sluggish development cannot be made up for.” All in all, the world economy is showing little momentum: high inflation rates, sharply increased interest rates in many markets and subdued demand are having a negative impact on foreign business. According to Treier, the export expectations of industrial companies are restrained. “The global economic environment is simply too gloomy for an export-driven economic upswing.” “Our exports have developed positively thanks to the improved economic situation in China and the USA, but we see more of a sideways movement here,” said Dirk Jandura, President of the Federal Association of Wholesale, Foreign Trade and Services (BGA). “Rising prices, as a result of the fight against inflation, cancel out the plus. So the situation seems better than it actually is.” The USA remained the largest buyer of German exports in April. Goods worth 13.1 billion euros were sold there, an increase of 4.7 percent. There was particularly strong growth in business with China (plus 10.1 percent to EUR 8.5 billion), measured in March, while exports to Great Britain shrank by 5.2 percent. Exports to Russia fell by 17.8 percent to 0.7 billion euros.
Compared to April last year, total exports grew by 1.5 percent, while imports shrank by 10.3 percent. In 2022 as a whole, German foreign trade achieved a record result, also due to price increases, some of which were significant. These drove up the value of both exports and imports.
The German economy has slid into recession, partly because of consumers’ reluctance to buy amid inflation. Gross domestic product shrank in both the final quarter of 2022 and the first quarter of 2023 – experts speak of a “technical recession” if there are two quarterly declines in a row.
Important industrial sectors are feeling the headwind. In mechanical engineering, for example, the slump in orders continued in April, as the industry association VDMA announced. He spoke of a “weak start to spring”. According to the Munich Ifo Institute, the current situation in the auto industry has improved. But the industry is increasingly pessimistic about the coming months. The chemical industry has been suffering for months from the weak global economy and high energy prices, which companies can only pass on to a limited extent.
The foreign trade association BGA sees a gloomy outlook for German exporters, also because of the interest rate hikes by the central banks. “The effects of the tightening of monetary policy should reach the economy and consumers in the euro area, but also in one of our most important foreign trade partners, the USA, on a broad basis in the coming months,” said President Jandura. That affects the economy. At the German-Chinese government consultations in June, the government must ensure that further difficulties for imports from China do not arise “due to false activism,” said Jandura. In addition, the interests of business must be taken into account in European regulatory projects.