July Sees Smaller Than Anticipated 0.9% Decline in German Exports

04 Sep, 2023

July Sees Smaller Than Anticipated 0.9% Decline in German Exports

In July, German exports experienced a milder-than-anticipated 0.9% decline compared to the previous month, reflecting ongoing global demand challenges, according to data from the federal statistics office. This outcome contrasted with the Reuters poll's projection of a 1.5% decrease. Carsten Brzeski, the Global Head of Macroeconomics at ING, remarked that trade, which was once a robust growth driver for the German economy, has now become a drag. Factors such as supply chain disruptions, a more fragmented global economy, and China's increased self-sufficiency in producing goods previously imported from Germany contributed to the export decline in June.

The data revealed a 1.4% increase in imports for the month, while the foreign trade balance showed a surplus of €15.9 billion in July, down from €18.7 billion the previous month. With the July drop in retail sales and disappointing export figures, the German economy's third quarter has started on a weak note, heightening the risk of a return to contraction, as cautioned by Brzeski.

Exports to European Union countries saw a 0.5% rise from the previous month, while those to non-EU nations declined by 2.5%, according to the office. Economist Bastian Hepperle at Hauck Aufhaeuser Lampe Privatbank pointed out that companies are facing challenges beyond weak global demand, including a gradual loss of competitiveness in global markets.

An Ifo survey in August indicated a slight deterioration in German export expectations due to sluggish foreign demand. Thomas Gitzel, Chief Economist at VP Bank, emphasized that as long as the global economic environment remains weak, German exports will continue to face challenges.