Despite sanctions on Russia, German exporters achieved record sales in 2014, inspiring the German Federal Association of German Wholesale, Foreign Trade and Services (BGA) to predict another record-breaking result this year, amid “growing risks and trouble spots”. EURACTIV Germany reports.
Germany’s Federal Statistical Office announced foreign trade numbers for 2014 on Monday (9 February), revealing German exports increased by 3.7% in nominal terms last year, reaching €1,133.6 billion.
Meanwhile, Germany’s imports grew by 2%, at €916.5 billion. As a result, the 2014 external trade balance concluded with a surplus of €217 billion. According to the Federal Statistical Office 2014 significantly exceeded the previous record of €195.3 billion from the year 2007.
“This is a respectable result for exporters after a year that was really not easy,” explained Anton F. Börner, president of the Federal Association of German Wholesale, Foreign Trade and Services (BGA).
“The main driver of growth was our core market, the European Union. However, more attention must still be paid to the eurozone, which only marginally contributed to growth. Apparently the results of exports to third countries were only able to be shown in a positive light due to the solid outcome from US exports.”
Russia sanctions weigh €6 billion
Despite growing risks and trouble spots, such as the euro bailout policy or the Ukraine-Russia conflict, Börner predicts 2015 will exceed the previous year’s record rate, with expected growth at 4%.
Trade with non-eurozone countries, like the United Kingdom and Poland, was particularly beneficial in 2014. Goods exported to such countries increased 10.2%.
Exports within the eurozone – by far the largest market for “Made in Germany” – grew by 2.7%. Demand from states outside the European Union only increased 1.5%. While business with the world’s two largest economies, the United States and China, noticeably flourished, international crises put a damper on trade.
Sanctions against Russia, alone, and currency volatility in that country, cost German businesses around €6 billion. Russian business is expected to suffer an additional 15% decrease in 2015, the Statistical Office estimated.
According to calculations from the ifo Institute, Germany has the world’s highest export surplus, more than those of second- and third-ranked countries – China and Saudi Arabia – combined. The BGA assumes that the surplus will rise again this year. “That is one effect of the weak euro,” explained Börner.
But the country’s export-heaviness has garnered considerable criticism, especially from those who see it as a risk for the stability of the global economy. The European Commission already categorises long-term surpluses of more than 6% as posing a threat to stability.
At the beginning of March, Brussels hopes to decide on Germany’s sustained export strength. Germany is advised to invest more, thereby increasing domestic demand and decreasing the export surplus.
Significant economic imbalances exist in 14 EU member states, according to an in-depth review of macroeconomic imbalances by the European Commission.
Due to Germany's high account surplus, the Commission said it sees room for improvement. The Federal Republic boasted an export surplus of roughly €200 billion, the world's biggest in 2013.
Critics complain that high export surpluses in Germany's economy have detrimental effects on other countries, where debt rises as a result. For example, during the eurozone debt crisis, the United States, urged Germany to do more to raise domestic consumption and address the problem.