Exports are growing, but industry believes the outlook is bleak

Exports from Germany are increasing for the fifth month in a row. But the export volume will probably decrease compared to the previous year. This is not just due to the corona shock.

A man maneuvers containers for onward loading at a logistics station in China.

Dhe German exporters continued to recover from the corona crisis before the second wave of pandemics thanks to the economic recovery of key trading partners such as China. Their exports rose in September for the fifth month in a row, by 2.3 percent on the previous month, as the Federal Statistical Office announced on Monday.

Interviewed economists had only expected an increase of 2.0 percent. Despite the race to catch up, exports remained 7.7 percent below the level of February 2020 – the month before the start of the corona-related restrictions. Imports fell 0.1 percent in September after growing four times in a row.

Industry and economists are expecting new headwinds because of the pandemic that has flared up again. “The German economy has to be prepared for the fact that the export prospects will continue to deteriorate by the end of the year,” said the general manager of the Federation of German Industries (BDI), Joachim Lang. “In addition to the ongoing corona shock, stricter export control rules threaten to slow down the growth opportunities of the global division of labor.” Overly restrictive visa and entry restrictions and excessive tariffs put additional pressure on world trade.

Orders will go down again

“The second corona wave and the containment measures that go with it are slowing down the economic recovery in neighboring European countries,” said VP Bank’s chief economist, Thomas Gitzel. “The foreign orders will probably get dents again soon.” This is also indicated by the export expectations of the companies, which fell significantly in October according to an Ifo survey.

From January to September, despite the recent recovery, exports remained well below the previous year’s figure: They fell by 11.7 percent to 880 billion euros. The BDI assumes that the bottom line will be a minus of 13 percent for 2020 as a whole. “This year we are only expecting an export volume roughly equivalent to that of six years ago,” said BDI expert Lang.

The economy is also likely to interrupt its recovery in the current fourth quarter because of the threat of weak exports. The gross domestic product grew in the summer quarter at a record pace of 8.2 percent, after it had fallen in spring by 9.7 percent as never before due to the measures taken to fight the pandemic. Many experts believe a further decline in the fourth quarter is possible, as new corona restrictions have been in place in Germany since the beginning of November.