Germany’s exports decline with recession in global economy

Germany’s exports fell 0.9 percent on-month in July due to the slowdown in the world economy.

The German Federal Statistical Office (Destatis) announced German foreign trade data for the month of July. Consequently, the country’s exports, seasonally adjusted and calendar, decreased in July by 0.9 percent compared to the previous month, despite the expectation of a decrease of 1.5 percent, up to 130.4 billion of euros.

In July, imports rose 1.4 percent to 114.5 billion euros.

Thus, Germany’s foreign trade surplus, corrected for seasonal and calendar effects, amounted to 15.9 billion euros. In July 2022, said surplus was registered at 4.2 billion euros.

Compared to July 2022, exports decreased by 1 percent and imports by 10.2 percent.

Of German exports in July, 71.9 billion euros went to countries of the European Union (EU). 61.7 billion euros of the country’s imports came from the EU.

Compared with June, exports to EU countries increased by 0.5 percent and imports from these countries increased by 2.9 percent.

According to Destatis data, Germany’s exports to China, its most important trading partner, increased compared to June by 1.2 percent and amounted to 8.3 billion euros. In the same period, Germany’s other major trading partner, the US, rose 5.2 percent to 13.5 billion euros.

Exports from Germany to Russia increased by 2.2 percent in July, reaching 700 million euros. Imports from Russia, by contrast, decreased by 15.7 percent to 200 million euros.

CHINA CHALLENGES THE GERMAN ECONOMY

According to analysts, given the weakening of exports, the risk increases that Germany, which has the largest economy in Europe, will enter recession again in the second half of the year.

Carsten Brzeski, Head of Global Macro Research at ING and Chief Economist for Germany, said: “Trade is no longer the strong and resilient growth engine of the German economy as it used to be, but rather a hindrance.” He used the phrase.

Pointing out that frictions in supply chains and a more fragmented global economy are affecting this situation, Brzeski said: “Add that China is increasingly capable of producing more goods than it used to buy from Germany.” he made the assessment of it.

Although the German economy contracted 0.4 percent in the last quarter of last year and 0.1 percent in the first quarter of the year, it failed to grow in the second quarter of the year.

While many crises such as the Covid-19 outbreak, supply chain disruptions, and the Russia-Ukraine war in recent years have brought weaknesses in the German economy to the surface, the fact that many countries, especially China can produce more and more imported goods from Germany and interest rates rise with high inflation, making it difficult for the German economy to grow.

Slowing global growth, falling industrial production and consumer efforts to cope with rising inflation are also negatively affecting the German economy.

ENGINEERING ORDERS ARE GOING DOWN

Meanwhile, export-strong German mechanical engineering firms continue to struggle against weakening customer orders.

The German Association of Engineers (VDMA) reported that orders from abroad fell by 11 percent in July compared to the same month last year.

Ralph Wiechers, VDMA Chief Economist, said: “Businesses continue to see an increase in their sales. However, due to the lack of sufficient new orders, the order book, and thus the remaining reserves for production and sales, are gradually declining.” He used the phrase. (AA)