Surprising December Boosts German Exports Despite Overall Decline

German exports have continued their downward trajectory, primarily influenced by a sluggish domestic economy and challenging external trade policies. According to recent data from the Federal Statistical Office, exports fell by 1.0% in 2024 compared to the previous year, amounting to approximately EUR1,560 billion. This decline follows a 1.2% decrease in 2023. Additionally, imports dropped by 2.8% to EUR1,318.5 billion, marking a consecutive annual reduction that experts attribute to weak domestic demand. These trends have resulted in a trade surplus of EUR241.2 billion.

Interestingly, December presented a contrasting trend, showcasing a 2.9% increase in exports compared to the previous month. Economists surveyed by Reuters had anticipated a decline of 0.6%. Imports also saw a rise of 2.1% during the same period. Notably, demand for German goods within the European Union surged by 5.9%, reaching EUR72.4 billion.

Despite the overall decline in exports, the United States remained the largest market for German goods, although exports to the U.S. fell by 3.5% to EUR13.5 billion. Exports to China rose by 1.4% to EUR6.7 billion, while those to the United Kingdom decreased by 6.6% to the same amount.

As the new year progresses, German exporters face challenges in capitalizing on the global economic recovery. The Ifo Institute's January survey revealed that the export expectations among industrial firms have dropped to their lowest level in a year, indicating a pessimistic outlook for future shipments. Factors contributing to this sentiment include the recent political changes in the United States, particularly the potential for increased tariffs under the new Trump administration, which has dampened business confidence.

Overall, while December's performance provided a temporary boost, the outlook for German exports remains cautious as the industry grapples with various external pressures.