Germany Export Growth Analysis: Rise Despite the Challenges

Germany’s economy has faced significant challenges in the last two quarters, from technical recession to becoming the old sick man of Europe. Germany has become the world’s 3^rd largest economy, despite challenges. Strong economic fundamentals, Govt policies, manufacturing power, strategic trade partners, and other factors, led Germany to register growth and improve its trade performance. Germany’s commodities export increased because of strong demand from the USA and China in 2024.

Here is Germany’s trade performance –

Germany’s commodities exports significantly grew by 13.6% in 2023, compared to last year’s value. Although there was a downfall in overall commodities exports in 2020, this decrease was attributed to the global slowdown due to COVID-19. However, exports increased after 2020, and imports decreased by $120 billion, in 2023. 

Germany Export Surge: USA a Favourable Market

Germany and the USA are strategic trade allies that signed various treaties to explore the untapped market like the Treaty of Friendship, Commerce and Navigation, and the Treaty and Investment Framework. By implementing this treaty both the countries increased the trade with each other.

Over the period, the USA has emerged as the biggest trading partner for Germany’s commodities exports. From 2021 to 2023, USA import commodities from Germany increased by 18%. Vehicles, nuclear reactors, and pharmaceutical products are the only commodities from Germany that cross the mark of $20 billion each year. Germany exported $36 billion of vehicles to the USA in 2023. Check the table for comprehensive details.

Germany’s Export to China: A Tale Rise and Decline

Since COVID-19, Bilateral trade between Germany and China has drastically declined from $122 billion in 2021 to $105 billion in 2023. The shift in the trade performance between China and Germany caused businesses to look for new markets for a sustainable supply of goods.

However, in March 2024, Germany’s export stats to China demonstrated an upward movement and registered a growth of 3%. Here is a detailed analysis of goods exports by Germany to China –

In the last three years, Germany’s exports to China declined by $17 billion, indicating the protectionist policies adopted by China to limit the entry of goods into its local market. Comparing the top five commodities for the last three years, vehicles other than railways and tramps were among the most declined commodities by 20%.

Germany’s Top Exports to the European Union

European Union, the world’s biggest trade bloc, contributes around 17% of global supply, facing the steepest declines in the growth rate of member countries, for instance, the UK’s and Germany’s economies were pushed into a technical recession.

However, with a strong economic base, Germany has sustained export growth to EU members. If considering the top export products, vehicles exported to the EU increased by $27.6 from 2021 to 2023, and the electrical machinery equipment increased by $5.3 billion in the same years. Check the table for more details. 

Germany’s Top Export Destinations

For the last two quarters, Germany experienced a technical recession, struggling to find a place for its export market. However, the rising demand of goods from USA and China offer German exporters a wider consumer base. For instance, exports to the USA increased by $2 billion from Jan to Feb 2024. On the other hand, with China, it increased by $200 million, in the same month.

Why Germany’s Goods Export Rise?

Easing of Global Supply Chain Disruption –

The geopolitical challenges that started in 2023, disrupted the whole supply network, for instance, the Israel -Hamas conflict, Piracy attacks in the Red Sea, etc. As this disruption loosened in 2024, German manufacturing regained the lost ground.

Govt Support for Exporter –

To sustain economic growth, the govt has supported manufacturers through various programs and offers by giving incentives and financing options.

Technology Innovation –

Germany with its state-of-the-art technologies, and continuous focus on Artificial intelligence, renewable energy, and advanced manufacturing, enables German exporters to enter the diverse market.

It becomes important for a country to implement policies to boost the confidence of local manufacturers to export more. Also, provide them incentives and financing services so businesses can set their manufacturing units for lasting growth machines.