German Trade Group Raises Alarm as Exporters Face Recession

By Klaus Lauer and Miranda Murray

BERLIN – German exporters are grappling with an impending recession, and the nation’s economic framework is facing significant challenges, according to the BGA trade lobby, which issued a warning on Wednesday as new forecasts signaled a continued decline in foreign trade.

For 2024, the Federation of German Wholesale, Foreign Trade and Services (BGA) anticipates a further drop in exports, estimating a contraction of 0.3%, while imports are projected to decrease by 2.0%.

BGA President Dirk Jandura described the forecasts as a critical alert for the German government, noting that around 70% of surveyed businesses believed Berlin’s actions were misguided or insufficient. He stated, "German foreign trade is facing a recession. We are caught in a vice between global economic weakness and domestic challenges. Our economic model is under massive pressure."

As the worst-performing major economy last year, Germany’s economy is heavily reliant on exports, which the government claims constitute half of the nation’s economic output.

Last month, German Economy Minister Robert Habeck warned that foreign trade would likely remain subdued for the foreseeable future, partly due to excessive dependence on China.

CONCERNS ABOUT KEY PARTNERS

Jandura highlighted growing concerns among BGA’s members regarding weak growth in the EU internal market, ongoing struggles in China, and the implications of the upcoming U.S. election. Sentiment among exporters has significantly declined since the first half of the year, with few expecting a turnaround in the latter half, leading to the lowest assessment of future business conditions recorded to date.

"The EU must brace itself, regardless of who wins in Washington in November," Jandura emphasized, urging preparation for a potential ‘America First’ strategy from the new president.

He also stressed the importance of addressing issues with China transparently, warning against tolerating competition-distorting subsidies while navigating a complex customs dispute. Jandura advocated for dialogue as a means to resolve conflicts without escalating tensions.

"The paths to preserving our status as an export nation are clear. We require less bureaucracy, reduced burdens, and, most importantly, a decisive commitment to engage in more free trade," Jandura concluded.