analysis
Status: 08/18/2021 8:52 a.m.
German exports are again higher than before the outbreak of the Corona crisis. Economists are confident that the boom will continue. But delivery bottlenecks and lockdowns are risks that are difficult to calculate.
In 2020, as a result of the pandemic, the German economy experienced its second largest slump since the Second World War – only in 2009 did the gross domestic product shrink even more in the wake of the financial crisis. The situation now appears to be recovering.
In June German exports increased by 1.3 percent. For the first time, German companies exported more than before the Corona crisis. Exports to other EU countries and the USA, where President Joe Biden is pumping a lot of money into the economy, rose particularly strongly. There was an increase of 40 percent here.
Nice view
The German Chamber of Commerce and Industry recently revised its forecast upwards and is now expecting an eight percent increase in exports this year. DIHK foreign trade director Volker Treier says: “The global demand has jumped unexpectedly quickly and strongly, from which the export-oriented German economy is benefiting.” However, the export growth is also due to catch-up effects. With the beginning of the Corona crisis, exports fell sharply in 2020 – this has been partly made up in the past few months.
The export industry ensured that there was no severe second wave of recession in the first half of 2021, says Jens Südekum, Professor of International Economics at the University of Düsseldorf. This was mainly due to the very good sales figures in China and increasingly also in the USA. They would have saved the German economy from worse.
“After the severe slump in exports in the spring of 2020, it was foreseeable that there would be a resurgence just as quickly,” said Südekum. “We observed the same pattern after the financial crisis. The global economic outlook for the coming years is definitely positive. In this respect, German exports should also do well for the foreseeable future.”
Transport problems and delivery bottlenecks
However, the transport problems, especially in shipping, and material delivery bottlenecks are currently causing considerable disruptions in international supply chains, reports the DIHK. “As long as the coronavirus is not contained worldwide, there is still a risk for German foreign trade that renewed waves of infections and the associated restrictions will interrupt international supply chains,” warns Treier. “The export-oriented German economy is closely interlinked with the global economy: production downtimes at suppliers, border closings and travel restrictions quickly have a negative effect on business operations.”
Recently, for example, the closings of the Chinese ports of Yantian and Ningbo meant that numerous container ships could not be loaded and unloaded. “Important supplier products do not reach the German companies in this way, so that the production lines are now even at a standstill at some companies,” says Treier.
There is also concern about a further increase in global trade barriers, which had already been seen in the course of the Corona crisis. The DIHK demands that stronger EU action against export restrictions from third countries and the expansion of trade agreements to facilitate the exchange of goods are all the more important.
Export industry unimpressed by restrictions
Südekum explains the current delivery bottlenecks with a surge in demand. “The offer still needs time to adjust to it. But within the next six months the bottlenecks and the price surges they triggered should have largely been resolved,” he says.
Overall, he is optimistic about the future. New lockdowns are not in sight. “If there are restrictions, it will mainly affect the consumption options for unvaccinated people in the service sector. The German export industry is likely to be largely unaffected by this,” said Südekum.
But viewed globally, there are still major challenges ahead. “Even if things are running smoothly again in many of Germany’s important sales markets, this is by no means the case for everyone.” Corona would continue to rage in markets like India or Brazil and that would also put pressure on the demand for German products. Südekum therefore demands “a country that is dependent on exports like Germany must therefore have a strong interest in the vaccination campaign making progress globally”.