German Exports Beat Expectations Despite Cooling Global Economy
German exports beat expectations despite a cooling global economy in the second quarter, driven by demand for chemical and car production.
German exports rose slightly more than expected in August. That's good news in a tough year for German exporters. In May 2022, Germany recorded its first negative trade balance in 20 years, mostly due to rising energy costs and inflation.
Despite a cooling global economy, rising interest rates, and supply chain bottlenecks, the German statistics office now sees exports slightly recovering. That’s also good for shipping and car exporting.
According to a Reuters poll, exports and imports were predicted to rise month-on-month by 1.1 percent. In August, they beat those expectations and rose by 1.6 percent compared to the previous year. Export risks have also been reduced.
Stronger demand from the U.S. and China
Tailwinds were stronger demand from the United States and China, which helped increase exports to 133.1 billion euros (132.59 billion U.S. dollars) in August. Imports increased by 3.4 percent to 131.9 billion euros, which exceeded expectations and marked the seventh month in a row of growth.
The country's seasonally adjusted trade surplus came in below expectations in August. According to the statistics office, it stood at 1.2 billion euros, which is way lower than the analysts' consensus forecasts of 4 billion euros.
The trade surplus shrank not because of stronger domestic demand but high energy prices and structurally weaker exports. Carsten Brzeski, an economist at the bank ING, comments, "The war in Ukraine, has succeeded in delivering what nothing else had managed before: letting the notorious German trade surplus disappear."
Outlook rather gloomy
August's numbers were good news overall, but forecasters warned that exports could drag on growth considering the global macroeconomic environment.
Energy costs remain elevated because of the war in Ukraine and are slowing domestic production. That will harm exports and economic development.
Especially a country like Germany, with its strong export industry, is exposed to global economic adversity. Global economic conditions will have to ease first to see a significant uptick in export growth.
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