German exports with the biggest increase in three and a half years

German foreign trade picked up surprisingly strongly at the beginning of the year. Exports rose faster than they have in three and a half years. At the end of 2023 there was another setback.

German exporters started the new year with the strongest increase in sales since mid-2020. In January, companies delivered 6.3 percent more abroad than in the previous month, as the Federal Statistical Office announced. Economists had only expected an increase of 1.5 percent.

At the end of 2023, the export economy had suffered a significant setback. German exports fell by 4.5 percent month-on-month in December. Imports also rose by 3.6 percent, twice as much as expected.

Business with the USA remains the most important, but is declining

“The start to the current quarter has been successful,” said chief economist Alexander Krüger from Hauck Aufhäuser Lamp Privatbank. Exports show a “crass countermovement” compared to the previous month. “Due to the weak global economy, ‘business as usual’ is not in sight.” In addition, competitive disadvantages continued to cause problems for exports, said Krüger.

After calendar and seasonally adjusted goods worth 135.6 billion euros were exported from Germany and goods worth more than 108.0 billion euros were imported. The increase in exports is primarily due to the good European business: companies sold goods worth 75.8 billion euros to the EU member states – an increase of 8.9 percent compared to the previous month.

However, the USA remained the most important buyer of goods “Made in Germany”. However, business with the world’s largest economy fell by 1.7 percent to 12.5 billion euros. Exports to China rose by 7.8 percent to 8.1 billion euros, those to Great Britain fell by 8.1 percent to 6.8 billion euros.

“Improvement is in sight”

After a real decline in exports of 2.2 percent last year, there is now hope for slight growth in 2024, said chief economist Thomas Gitzel from VP Bank. “This requires better economic development abroad.” Recent economic data also signaled something of this.

“The good start of exports in 2024 also has symbolic value,” emphasized Gitzel. “The message is: improvement is in sight.” This is also reflected in the mood in the German export industry, which also brightened slightly in February, as the Munich-based Ifo Institute recently found in its monthly company survey. The barometer rose to minus 7.0 points, from minus 8.5 points in January.

“The German export industry is currently hardly benefiting from global economic developments,” said the head of the ifo surveys, Klaus Wohlrabe. “There is still a lot of room for improvement.” Only a few sectors expect growth in exports – such as food producers, beverage manufacturers and the glass and ceramics industry. “In mechanical engineering, however, expectations fell to their lowest level since June 2020,” it said.