These are dark days for the German economy but rays of light continue to break the gloom. The latest comes in the form of news that Germany has toppled the United States as the world’s number one exporter.
Germany keeps making them, foreign economies keep buying them
German businesses have contributed to making Germany the world’s largest exporter for the first time in 11 years, raising optimism that unpopular wage capping has boosted the competitiveness of German industry.
According to a report in the Financial Times Deutschland, Germany recorded $62 billion (€55.6 billion) in exports in August, over 7 percent more in dollar terms than the United States, the consistent world leader. The report, based on figures from the Organization for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), shows that Germany has been ahead of the United States in terms of export levels since April this year.
Best showing since the early 90's
German export figures have been suffering since the early 1990’s due to the perceived lack of appeal of German products abroad, high wages and the sharp appreciation of the Deutsch Mark that followed reunification. But, according to the experts, by controlling costs Germany has been able to rise to the top of the export league table once more, forcing the U.S. into second place and Japan into third.
The Euro is helping German exports...for now.
"Today, we don't have these problems any more," said Harald Jörg, an economist at Dresdner Bank told the FTD while Elga Bartsch, an analyst at Morgan Stanley, said Germany had profited from a strong presence in export markets in eastern and central Europe. Fabian Wehnert of the BDI, the German industry federation, told the paper that trade with the new EU member states had risen by about 6 percent. The surge of the euro against the dollar in the first half of this year has also been a contributing factor.
Good export news continues
The latest good news concerning German trade follows on from last year’s figures that showed that Germany was the market leader in machinery exports with 19 percent of the global market share, ahead of the U.S. with 14.9 percent and Japan with 12.2 percent.
Size isn't everything.
However, if high exchange rates continue, they could be a threat to Germany’s current position in the long run. The recent strong export performance comes just a week after the euro soared to near-record highs against the U.S. currency, triggering worries that its continuing ascent could hamper German export growth and damage the eurozone's fragile upturn.
More growth forecast for 2004
Despite this possibility, the BDI reported this week that it expects German exports to keep growing, by at least 4 percent in 2004 according to the federation’s statement on Monday. But imports are also expected to rise and at an even faster pace as a result of the strong euro. If they don't, then exports will continue to push the domestic economy forward to a recovery on its own, according to BDI director Ludolf von Wartenberg.