German companies sell a lot abroad and thus stabilize the economy. “Exports are a major engine of the recovery after the Corona crisis”, analyzes economist Jens Südekum. However, some challenges emerge: from missing parts for production to climate issues to the titanic battle between the United States and China.
In June, German exports increased by 1.3 percent, reports the Federal Statistical Office. This is the fourteenth consecutive monthly increase. Exports to other EU countries – and to the United States, where President Joe Biden is pumping a lot of money into the economy – were above average compared to the previous year. There has been a 40 percent increase here.
“When the corona pandemic broke out, trade collapsed,” says Jens Südekum, professor of international economics at the University of Düsseldorf. “Value chains were torn apart. But then exports took off faster than overall economic development. Business with China and the United States pulled German industry out of the mud and bolstered the economy at times. difficult. “
In 2020, the German economy collapsed as badly as it had ever since World War II, only during the 2008 financial crisis. Exports resumed while shops and restaurants were still closed. They are now higher than they were before the outbreak of the pandemic. The outlook for the near future is also good. The German Chamber of Commerce and Industry recently revised its forecast upwards. This year, the association now expects an eight percent increase in exports.
Transport problems and delivery faults slow down production
Stefan Kooths pours water into the wine. About half of the increase in exports in June is due to price effects, calculates the economic director of the Kiel Institute for the World Economy (IfW). If you only look at the quantities sold overseas, they actually decreased in April and May. The reasons for this are transport problems and poor delivery of parts such as chips, which slow down production.
A lot of things come together this year. Frost shut down woodchip production in the United States and a woodchip factory burned down in Japan. Containers are scarce on many routes, in March the giant ship Ever Given ran aground in the busy Suez Canal and stranded other ships for days. “The rate of export expansion has slowed considerably,” warns IfW economist Kooths. “But this is not due to a crippling global economy, but rather to transportation barriers and delivery bottlenecks.”
Kooths calculates that these problems have cost Germany 25 billion euros in economic output this year. They also slowed exports in July and August and, in his view, will remain a problem until the end of the year. There is nothing politicians can do about it: “The logistics industry needs to solve this problem. He explicitly denounces the mental games that have been heard over and over again since the outbreak of the pandemic: Germany and Europe should bring back more production in order to arm themselves against delivery problems. “To renounce the benefits of free trade would be suicide for fear of death. And why should I? This year there were really a lot of logistical problems. Such an accumulation is rare.
In order to secure free trade and its benefits for Germany, Kooths calls on politicians to hold back more. Transferring its own environmental or labor standards to other countries through supply chain law, for example, will not work – and will be understood by those countries as protectionism. Kooths urges the EU to design the planned climate tariff for imports from countries with less climate protection in such a way that it is not interpreted as a declaration of war: “The EU should share the revenue from this adjustment half and half of borders with other countries. “
Industrialized countries should quickly deliver unused vaccine doses to the poorest countries
Meanwhile, Jens Südekum from the University of Düsseldorf is worried about another issue that threatens foreign trade as well as human life. “In countries like India or Brazil, the pandemic is still raging and there are few vaccinations. If the rest of the world is in the pandemic for another year or two, that’s bad news for many. reasons. ” Südekum calls on industrialized countries to deliver unused vaccine doses as quickly as possible to the poorest countries and to do everything to speed up vaccinations there.
Another issue looms on the horizon that will have a major impact on the future of commerce and the German economy in general. “If Donald Trump had won the election, he would have given European companies the choice to do business with the United States or only with China. It was the worst-case scenario for DAX companies,” Südekum said. Joe Biden speaks differently and doesn’t degenerate like Trump, but he could also pressure Europe to side with him against China. I’m still waiting for a clear signal on what Biden really wants . “
Südekum expects German companies and large medium-sized companies to try to bypass possible trade disputes: by further boosting production and sales in China and the United States, in order to remain unscathed as a company almost local if a trade dispute arises. So far, these direct investments abroad have cost no jobs in Germany. “If in the future entire production routes are relocated and core industry skills are not left at home, as has been the case in the past, this could well lead to loss of business. jobs. “
The economist advises Europe to have more confidence in itself in the titanic fight between the United States and China – and to invest in the future. Joe Biden tries to use big spending programs to specifically develop technologies and attack business models that have hitherto been the domain of Europe. “Europe must launch massive government investments to become strong and independent – then the United States or China will try less to exert pressure.” On this issue, Südekum sees the federal elections as decisive: “Someone has to come to the Chancellery to tackle such an investment agenda.”