German Exporters Face Recession and Economic Pressure

By Klaus Lauer and Miranda Murray

BERLIN (Reuters) – German exporters are grappling with a recession as the country’s economic model faces “massive pressure,” according to the BGA trade lobby on Wednesday. New forecasts suggest further deterioration in foreign trade.

For 2024, the Federation of German Wholesale, Foreign Trade and Services (BGA) anticipates exports will decline by 0.3%, with imports expected to fall by 2.0%.

BGA President Dirk Jandura called these forecasts a wake-up call for the German government, noting that about 70% of surveyed businesses believe Berlin’s measures are misguided or insufficient.

“German foreign trade is facing a recession. We are caught in a vise between global economic weakness on one side and domestic weakness on the other. Our economic model is under massive pressure,” he stated.

Germany’s economy, the worst-performing major economy last year, significantly relies on exports, which account for half of the country’s income, according to Berlin.

Economy Minister Robert Habeck warned last month that subdued foreign trade is likely to persist, partly due to Germany’s strong dependence on China.

Concerns about Key Partners

BGA’s hundreds of members have expressed concerns regarding weak growth in the EU, ongoing poor performance from China, and the impact of the upcoming U.S. election, as mentioned by Jandura.

Sentiment among exporters has noticeably declined since the year’s first half, with expectations for recovery dimming, leading to the lowest assessment of future business performance to date.

“The EU must prepare itself, regardless of who wins in Washington in November,” Jandura remarked, alluding to a response to the anticipated ‘America First’ strategy of the new president.

He also stressed the importance of addressing issues with China diplomatically, emphasizing that competition-distorting subsidies are unacceptable and urging dialogue to resolve customs disputes without escalating tensions.

Jandura concluded, “The levers for saving our model of the export nation are clear. We need less bureaucracy, fewer burdens, and most importantly, a definitive commitment and courage for greater free trade.”