The mood in the German export industry is worse than it has been since the beginning of the corona pandemic. Demand from the most important regions is noticeably decreasing.
German exporters are heading into the fall in a worse mood than they have been in more than three years. The barometer for export expectations collected by the Munich Ifo Institute fell to minus 11.3 points in September, after minus 6.5 points in August. After the fifth consecutive decline, the indicator is now at its lowest level since May 2020, when the spreading corona pandemic clouded the outlook.
“The export economy is in a phase of weakness,” said the head of the Ifo surveys, Klaus Wohlrabe. “Exports to all major regions are currently declining.”
Experts see the main reason as being the tight monetary policy of the major central banks. In the fight against inflation, the American Fed and the European ECB in particular have significantly increased their key interest rates. This drives up the financing costs for investments and makes many projects unprofitable. “The rise in interest rates worldwide is having an effect,” said Wohlrabe. “They dampen demand for German goods.”
Car manufacturers more skeptical – trend reversal in 2024?
As the ifo Institute’s business survey showed, only manufacturers of leather goods and furniture as well as some companies in the food industry are currently expecting an increase in exports. All other sectors are expecting a decline in foreign business. The interim hopes of growth in the chemical industry from the previous month have evaporated again. Car manufacturers have also become a little more skeptical. Printers are currently the most pessimistic.
“Export demand will probably only pick up significantly again next year,” said Wohlrabe. In its autumn forecast, the Ifo Institute expects German exports to shrink by 0.3 percent this year. For 2024, economic researchers expect growth of 2.4 percent again, which should increase to 3.7 percent in 2025.