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Container ship in the Port of Hamburg: Mixed outlook

Photo: Marcus Brandt / dpa

For years, exports were a guarantee of a flourishing German economy. Even in times of recession, exports have now risen surprisingly at the start of the second quarter. They climbed by 1.2 percent in April compared to the previous month to 130.4 billion euros, according to the Federal Statistical Office.

In March, there had been a minus of 6.0 percent. Economists had expected a decline of 2.5 percent for April.

Imports fell by 1.7 percent to 112 billion euros in April, almost twice as much as expected. "The growth is far from sufficient to make up for the sharp decline of the previous month," said chief economist Alexander Krüger of Hauck Aufhäuser Lampe Privatbank. The outlook is mixed. "Foreseeable diminishing impulses from China and the USA do not exactly brighten the export view."

Exports to the EU countries rose by 4.5 percent to 71.4 billion euros in April compared to the previous month. The USA remained the number one customer country, selling goods worth 13.1 billion euros, an increase of 4.7 percent. Exports to China grew by 10.1 percent to 8.5 billion euros, while those to the UK fell by 5.2 percent to 6.1 billion euros. Exports to Russia fell by 17.8 percent to 0.7 billion euros. Compared to the same month last year, total exports rose by 1.5 percent in April, while imports fell by 10.3 percent. In 2022 as a whole, German foreign trade had achieved a record result, also due to price increases, some of which were significant. These drove up the value of both exports and imports.

"The situation seems better than it actually is"

Despite this glimmer of hope in exports, the German economy as a whole has slipped into recession due to falling consumer spending by inflation-stricken consumers. Gross domestic product (GDP) fell at the end of 2022 and also at the beginning of 2023 – two quarters in a row. Experts refer to this as a technical recession. "Due to the decline in imports, the trade surplus remains positive," said Krüger, referring to exports and GDP. "This dampens worries about a crash in economic growth."

Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce (DIHK), said that overall, the global economy was not generating much dynamism: high inflation rates, the sharp rise in interest rates in many markets and subdued demand are weighing on foreign business. The export expectations of industrial companies are subdued.

"Our exports have developed positively thanks to the improved economic situation in China and the USA, but we see more of a sideways movement here," said Dirk Jandura, President of the Federal Association of Wholesale, Foreign Trade and Services (BGA). "Increased prices, as a result of the fight against inflation, cancel out the plus. So the situation seems better than it actually is."

The BGA also sees gloomy prospects for German exporters due to interest rate hikes by central banks. "The effects of monetary tightening are likely to reach the economy and consumers on a broad basis in the euro area, but also in one of our most important foreign trade partners, the US, in the coming months," Jandura said. This is hitting the economy.

apr/Reuters/dpa