Germany: back to its former strength?
German foreign trade compared to its European counterparts
Germany's export industry is currently benefiting from the dynamic pace of growth in the world's emerging economies, particularly those in Asia. One key factor for this positive development is the regional structure of Germany's trading partners, which is one reason by German exports are rising faster than those of most other EU member states. Furthermore, the structure of German export products - with their emphasis on motor vehicles, capital goods and intermediate goods - is also an advantage at present. German companies are also benefiting from the stimulus plans that many of its trading partners have enacted. However, the "growth gap" between industrialised and emerging economies is expected to decrease over the coming year; as a result, the regional competitive advantage of German exporters compared to other EU states is likely to diminish somewhat.
-
German foreign trade: a strong rebound
-
Structure of upswing favourable to German exporters
-
EU states benefit from the dynamism of Germany's import activity
-
Germany's regional advantages are likely to subside over the coming year
-
Long-term opportunities and challenges facing Germany's export industries
German foreign trade: a strong rebound
Due to its strong orientation toward exports, the German economy was hit disproportionately hard by the global financial and economic crisis last year. In 2009, German GDP contracted by 4.7 percent. This drop was more severe than both the EU average as well as the rate of decline in most other industrialised countries, including the United States. The negative contribution to growth by foreign trade stood at approximately three percentage points. The primary cause of this contraction was the collapse in global demand for durable manufactured goods (such as motor vehicles, machinery and equipment) and intermediate goods, which together account for over 70 percent of Germany's exports. [1]
However, leading indicators - particularly foreign orders and export trends - currently point to a strong, export-led rebound of the German economy. The German economy stands to benefit greatly from positive trends at the global level. Both the International Monetary Fund (IMF) and the OECD have forecast a strong rebound in world trade in 2010 (IMF: 9 percent; OECD: 10.5 percent). The IMF expects the global economy to grow at a rate of 4.6 percent in 2010, although growth will be considerably more pronounced in Asian emerging economies than in western industrialised nations (see Figure 1). The OECD has forecast an overall growth rate of 2.7 percent among OECD countries in 2010, while growth in the EU is likely to be substantially more subdued at about 1.75 percent.
----------------------------------------
[1] See Cheung, C. and S. Guichard (2009), "Understanding the World Trade Collapse", OECD Economics Department Working Papers, No. 729; Deutsche Bundesbank, March 2010 monthly report "German Balance of Payments in 2009", pp. 17-32.
Print version