Economy | 23.03.2008
German Exports to US Hit by Slowing American Economy
German exports to the United States last year dipped by 5.9 percent to 73.4 billion euros ($115 billion), the country's federal statistics office revealed this week.
The fall has been attributed to a sagging US economy, which experts say is facing a sharp slowdown, and a soaring euro.
"That does hurt a lot," Andre Schwarz, spokesman of the Federation of German Wholesale and Foreign Trade (BGA) told the dpa news agency.
In light of the euro's growing strength against the dollar, the group predicts a slump in German exports to the US this year, too.
US slowdown affecting German economy
While Germany can count on its export-driven economy to perform well this year, fears are mounting that a slowing US economy and the recent credit crisis will have a negative impact on Germany's domestic economy although government officials insist "there is no reason to panic."
"Little by little, the turbulence in the financial markets and the strong euro are taking their toll," Gustav Horn, director of the Macroeconomic Policy Institute, said this week.
He predicted that growth would reach 1.3 percent, down from a previous forecast of 1.5 percent. Germany's economy booked 2.5 percent growth last year.
Threats to Germany's economy cannot be attributed to a single cause, according to Juergen Thumann, head of the Federation of German Industries.
"It is the influence of the weak dollar, rising oil prices, falling US economy and the financial crisis that are making the situation difficult for companies," he told daily Berliner Zeitung.
Exports to Poland surge
Still, Germany saw overall exports jump in 2007 to 969 billion euros, a surge of 8.5 percent. The BGA expects the rise to continue and increase by another five percent this year to surpass the one trillion euro mark for the first time.
Despite the US slump, German exports to other countries saw robust growth. Among Germany's 15 most important export partners, exports to Poland last year registered the highest increase, soaring by 24.3 percent to 36.1 billion euros.
Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Germany's economy is heavily reliant on exports
Growth was also strong in Russia with Germany exporting goods worth 28.2 billion euros -- an increase of 20.6 percent from the previous year. The BGA forecasts that German exports to Russia will climb by another 20 percent this year due to Russia's focus on infrastructure investment.
Russia expected to overtake China
France remained Germany's most important export partner. Last year, German exports to its neighbor jumped by 10.4 percent to reach 93.9 billion euros.
France was followed by the US, Britain, Italy and the Netherlands as Germany's most significant export partners.
China remains an important player on the German economic landscape with exports last year soaring by 8.9 percent to reach 29.9 billion euros. However, Russia is expected to overtake China in the export field because of the latter's dependence on the US economy.
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