In view of the sluggish global economy, German exporters got off to a weak start in the second half of the year. On the other hand, imports increased surprisingly significantly. Is there a risk of a double-dip recession?
German foreign trade fell slightly in July. Exports fell by 0.9 percent compared to the previous month to 130.4 billion euros, as reported by the Federal Statistical Office. Exports had risen three months previously, albeit twice only slightly by 0.2 percent each time. However, economists surveyed by the Reuters news agency had expected a sharper drop in exports of 1.5 percent.
On the other hand, imports increased surprisingly significantly: In July they rose by 1.4 percent compared to the previous month to 114.5 billion euros. This increase was almost three times as strong as expected by economists.
China produces instead of buying
According to experts, given the weakening exports, there is a growing risk that Europe’s largest economy will slide back into recession in the second half of the year. “Foreign trade is no longer the strong, resilient growth engine of the German economy that it once was, but a brake pad,” said ING chief economist Carsten Brzeski.
Frictions in supply chains and a more fragmented global economy are a burden. “In addition, there is the fact that China is increasingly able to produce goods that it previously bought in Germany,” explains Brzeski.
“It’s not just the global weakness in demand that is causing companies more and more problems,” commented economist Bastian Hepperle from the private bank Hauck Aufhäuser Lampe. “They are also suffering from the erosion of their competitiveness in global sales markets.”
Exports to the EU are increasing
Exports to the EU countries increased in July by 0.5 percent on the previous month to 71.9 billion euros, while other foreign business fell by 2.5 percent. The USA remained the number one buyer country. Goods worth 13.5 billion euros were sold there, an increase of 5.2 percent – although the high interest rate level is dampening demand for goods “Made in Germany”. Exports to China also increased, by 1.2 percent to 8.3 billion euros.
Exports to Britain, on the other hand, fell, while exports to Russia increased by 2.2 percent to 0.7 billion euros, despite Western sanctions as a result of the war against Ukraine.
mood has deteriorated
A turnaround in foreign trade is unlikely for the time being. The mood in the German export industry has recently deteriorated slightly. The barometer for their expectations for foreign business fell to minus 6.3 points in August – from minus 6.0 points in July, according to the Munich ifo Institute in its monthly survey.
“German exporters continue to struggle with weak global demand,” said Klaus Wohlrabe, head of the ifo surveys. In addition, more and more companies are complaining that their global competitiveness is suffering.