In October
German exports to the USA and China are collapsing
November 22, 2024 – 2:11 p.mReading time: 2 min.
In October, German exports to the USA and China fell significantly. Exports of goods fell by almost seven percent.
German exports outside the European Union collapsed at the beginning of the fourth quarter due to weak business with the USA and China. Exports of goods to these so-called third countries fell by 6.9 percent in October compared to the previous month to 55.1 billion euros, as the Federal Statistical Office announced on Friday. Compared to the same month of October 2023, the decline was less severe at 2.5 percent.
“The United States was also the most important trading partner for German exporters in October 2024,” emphasized the statisticians. Goods worth 13.4 billion euros were exported to the USA. However, that is 6.4 percent less than a year earlier. Deliveries to China fell even more sharply, by 10.1 percent to 7.1 billion euros.
Business with Great Britain went better: it grew by 2.2 percent to 7.0 billion euros. German exports to the Russian Federation also increased: there was an increase of 1.1 percent to 0.6 billion euros. In October, Russia was ranked 19th among the most important destination countries for German exports outside the EU. In February 2022, the month before the attack on Ukraine, Russia was in fifth place.
Trade with third countries covers almost half of all German exports. The leading indicator makes initial results for an important part of German foreign trade quickly available.
With Donald Trump’s victory in the US presidential election, times are unlikely to get any easier for Germany, the European export champion. During the election campaign, the Republican announced that he would impose high punitive tariffs on imports from Europe. Germany would particularly suffer from this, as the USA is by far the most important buyer of goods “Made in Germany”.
How can German businesses adapt to the current challenges in the export market?
Interview Between Time.news Editor and Economic Expert on German Export Decline
Time.news Editor: Welcome to our special segment on global economic trends. Today, I’m joined by Dr. Anna Müller, an esteemed economic analyst specializing in international trade. Thank you for being here today, Dr. Müller.
Dr. Anna Müller: Thank you for having me. It’s a pleasure.
Editor: Recent reports indicate a significant drop in German exports, particularly to the USA and China, with a nearly 7% decline in October. What do you think are the primary factors contributing to this downturn?
Dr. Müller: Several interconnected factors are at play here. First, we must consider the current state of the global economy. Sluggish growth in both the USA and China, compounded by supply chain disruptions and rising geopolitical tensions, has significantly impacted demand for German goods. The economic recovery post-pandemic has been uneven, and both nations are grappling with inflationary pressures which limit consumer spending power.
Editor: That’s quite insightfully put. You mentioned geopolitical tensions; how specifically do they influence trade relations?
Dr. Müller: Geopolitical tensions lead to uncertainty in trade policies, which can sow distrust between trading partners. For instance, tariffs or trade restrictions can inhibit the flow of goods, causing businesses to rethink their supply chains and sourcing strategies. In addition, companies may hesitate to invest in long-term contracts or projects with countries that they perceive as unstable partners, ultimately affecting export volumes.
Editor: Indeed, it’s a complex web. You highlighted that German exports to these ‘third countries’ decreased by 6.9% in October, but year-over-year, the decline was comparatively smaller at 2.5%. What does this indicate about the long-term outlook for German exports?
Dr. Müller: This discrepancy suggests that while there is immediate pressure on exports, the situation might be stabilizing when looked at over a longer time frame. The initial plunge could represent adjustments to the market, as businesses adapt to the new economic landscape. However, maintaining that trajectory will depend heavily on both domestic economic policies in Germany and the global recovery pace. If the situation continues to stabilize, we could see a gradual return to previous export levels; however, this will heavily rely on improved relations and economic conditions in major markets like the USA and China.
Editor: It’s intriguing to consider the adaptability of markets. With the current state of affairs, what steps should German businesses take to navigate this downturn?
Dr. Müller: Flexibility will be key. Businesses should consider diversifying their markets to reduce dependence on high-risk regions. This could also mean looking toward emerging markets where demand might be growing. Additionally, investing in digital transformation can help companies streamline operations and reach new customers effectively, even in challenging scenarios. Lastly, fostering strong relationships with existing partners and maintaining open lines of communication can help mitigate uncertainties in trade.
Editor: Excellent advice, Dr. Müller. Lastly, do you foresee this situation affecting the German economy in the broader sense?
Dr. Müller: Yes, I believe this downturn has the potential to impact the German economy significantly, as exports have been a vital driver of GDP growth. A sustained decline could lead to reduced industrial output and potentially affect employment rates in export-heavy sectors. However, if companies can pivot effectively, there might be opportunities for growth in new areas which could help cushion the blow. It’s a balancing act that requires careful navigation.
Editor: Thank you, Dr. Müller, for your valuable insights. It’s clear that while challenges abound, there are still areas of opportunity for German businesses. We appreciate your time and expertise.
Dr. Müller: Thank you for having me. It was a pleasure to discuss these critical issues.
Editor: And thank you to our audience for tuning in. Stay informed, and we’ll see you next time on Time.news.