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Country trade view Germany Trends in global trade
Country trade view GermanyTrends in global trade
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Country trade view Germany · September 2015 2
Summary
• Germany is an important player in the area of world trade: it is both the third largest importer and the third largest exporter, only exceeded by China and the US.
• Most of Germany’s imports are in the product groups “other manufactured goods” (miscellaneous, but intermediate products of metal play a large role), office, telecom, and electrical equipment, and road vehicles and transport equipment. The comparatively favourable developments in export competitiveness of particularly the strong German tech industry fuel demand for imported inputs and intermediates. Also given a pickup in domestic demand, substantial import growth in industrial machinery, road vehicles and transport equipment, office, telecom, and electrical equipment, and pharmaceuticals is expected for the next five years.
• The largest origin of German imports by far is the Netherlands, followed by France, China, Belgium and Italy. In the case of the Netherlands and Belgium, re-exports play a significant role in their high ranking. In terms of product groups by country, the largest flows are road vehicles and transport equipment from France. Of this flow, more than half falls in the category “aircraft & associated equipment” and is explained by a large airplane manufacturer which has main production facilities in both Germany and France. Office, telecom and electrical equipment from China is second, while chemicals from Belgium are third. Fast growth for the next 5 years (significantly above the global import average of 3%), is expected to take place in import flows of miscellaneous manufactured goods and office, telecom, and electrical equipment from China. Chemicals from the Netherlands are also expected to grow fast.
• Going forward, opportunities for exporters to Germany may well present itself in a number of fields. Firstly, Germany is the fastest ageing European country. Secondly, the country needs to tackle some weaknesses in infrastructure. Thirdly, the “Energiewende”, the transition towards sustainable energy, in which Germany is leading, is still in progress.
• Germany is a world leader in exporting high-quality goods. The country has over the past decade further improved on its competitive position: increasing productivity, effective outsourcing, and low wage growth helped further Germany’s manufacturing exports. The weakness of the euro is currently also helping the country’s export position.
• Germany’s main export products reflect its strong technology industry. Exports consist mainly of road vehicles and transport equipment, miscellaneous manufacturing, industrial machinery and office, telecom, & electrical equipment. The top 3 fastest growing product groups (2015-2019) are expected to be industrial machinery, road vehicles and transport equipment, and chemicals.
• Germany’s largest export destinations are France, the US, the UK, China and the Netherlands. Of these, exports to the US are expected to show particularly strong growth - given the weakness of the euro and comparatively higher expected demand growth in US - as well as exports to Poland.
• Of the most important trade partners, trade barriers still play a significant role in the US (on meat, dairy, egg and plant products) and in China (restrictions regarding imports such as meat, pharmaceuticals and cosmetic
products). In the case of the US, the ongoing TTIP negotiations may offer the opportunity to advance on settling these issues.
• Largest exports flows are road vehicles and transport equipment to the US, France, the UK, and China, industrial machinery to the US and China, and other manufactured goods to EU countries. Substantial growth is expected to occur in road vehicles and transport equipment, machines, and office and telecom equipment to China and wider emerging Asia (Vietnam, India) as well as pharmaceuticals to the region.
• It should be noted, however, that recent data, which are not yet incorporated in the forecasts, show rapid deterioration in Chinese (and regional) import demand. As Germany benefited more than other countries in Europe from the rise of China, given its comparative advantage in machinery, transport equipment and other manufactured goods, it is likely that Germany would also be above-average hit by a slowdown in China. Therefore, although the numbers don’t yet show a drop in German exports to China, particularly shortterm exports to China and the wider region could disappoint.
About International Trade Research at INGING International Trade Research aims to help ING’s (inter)national clients develop their knowledge and capabilities for doing business across borders, and contribute to the public debate on internationalization. We do this by providing insights on the current and future economic trends and international trade developments worldwide.
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Country trade view Germany · September 2015 3
Economic profile
1 End period
Germany’s trade profile: goods export share, 2014
2014 2015
Competitiveness rank WEF 4 5
Ease of doing business rank 21 14
Credit rating
S&P AAA
Moody’s Aaa
Fitch AAA
Economy
Population
Other indicators
2015 2016F 2017F
GDP growth (real) 1.6% 1.8% 1.5%
GDP nominal ($bn) 3,413 3,514 3,643
GDP per capita ($) 54,597 56,421 58,625
Exchange rate1 EUR/USD 1.05 1.02 1.10
Inflation: 0.5% 1.6% 1.9%
GDP composition by sector 2014 est.
Agriculture 0.9%
Industry 30.8%
Services 68.4%
2014
Population (mln) 81.1
Unemployment rate (avg.) 5.0%
North America11%
South America2%
Africa2%
EU61%
CIS4%
Asia20%
Oceania1%
Agriculture & raw materialsExports $ 6Imports $ 10
Basic foodExports $ 48 Imports $ 71
Beverages & tobaccoExports $ 8Imports $ 7
Office, telecom & electrical equipmentExports $ 105Imports $ 112
ChemicalsExports $ 101Imports $ 92
FuelsExports $ 12Imports $ 64
Industrial machineryExports $ 168Imports $ 74
Ores & metalsExports $ 28Imports $ 27
Other manufactured goodsExports $ 182Imports $ 151
Other productsExports $ 51Imports $ 25
PharmaceuticalsExports $ 61Imports $ 34
Road vehicles & transport equipmentExports $ 233Imports $ 99
TextilesExports $ 21Imports $ 49
Exports (bn) $1,511 Imports (bn) $1,224 Trade balance (bn) $287 Exports % of GDP 44%
Product group amounts in USD bn, and for the 32 partner countries distinguished
Sources: ING, IMF World Economic Outlook, UNCTAD, national sources
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Country trade view Germany · September 2015 4
Expected real GDP growth
Source: IMF World Economic Outlook, ING Forecasts
Germany’s 1.6% growth performance in 2015 is almost unchanged from last year.
The country is growing slightly faster than the eurozone average of 1.4%, helped by a pickup in domestic demand and a weak euro, which is benefiting the already good competitiveness of German exporters. The global economy is expected to expand by 2.6% this year, down from 3.4% in 2014.
United States
South America
MENA
Eurozone
Central and Eastern Europe
Commonwealth ofIndependent States
Developing Asia
0.81.4 1.8
2014 2015 2016
2.0 2.3 2.6
2014 2015 2016
2.7 2.63.8
2014 2015 2016
1.30.5
1.7
2014 2015 2016
2.8 2.9 2.9
2014 2015 2016
1.6 1.8 1.5
2015 2016 2017
Germany
1.0-2.2
1.2
2014
2015
2016
6.8 6.6 6.3
2014 2015 2016
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Country trade view Germany · September 2015 5
Trade forecast
Germany is the third largest importer (of goods) in the world, after the US and China.
Imports are expected to grow an annual 3% in the coming years (in nominal USD, 2015-2019), lower than the 4.3% expected annual growth globally. Germany’s exports are expected to grow 2% annually in the coming years. As imports are expected to grow faster than exports, the country’s trade surplus vis-a-vis the rest of the world is expected to decrease. It is expected to remain sizeable, however, at 4-5% of German GDP in 2019.
Source: Oxford Economics
Total imports Total exports
Germany 1999 2014 2019
World ranking 2 3 3
CAGR 2015-2019 3.0%
Germany 1999 2014 2019
World ranking 2 3 3
CAGR 2014-2018 2.0%
1100
1200
1300
1400
1500
1600
2014 2019
$bn
1100
1200
1300
1400
1500
1600
2014 2019
$bn
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Country trade view Germany · September 2015 6
Demand for products: imports by product group
Most of Germany’s imports are in the product groups “other manufactured goods” (miscellaneous, but intermediate products of metal play a large role),office, telecom, and electrical equip-ment, and road vehicles and transport equipment.
The comparatively favourable developments in export competitiveness of particularly the strong German tech industry fuel demand for imported inputs and intermediates. Also given a pickup in domestic demand, substantial import growth in industrial machinery, road vehicles and transport equipment, office, telecom, and electrical equipment, and pharmaceuticals is expected for the next five years.
For the 32 partner countries distinguished
Source: Oxford Economics
0 20 40 60 80 100 120 140 160 180 200
Beverages & tobacco
Agriculture & raw materials
Other products
Ores & metals
Pharmaceuticals
Textiles
Fuels
Basic food
Industrial machinery
Chemicals
Road vehicles & transport equipment
Office, telecom & electrical equipment
Other manufactured goods151.3
112.4
98.7
91.8
73.9
70.5
64.1
49.2
33.9
27.4
25.4
10.4
7.3
189.8
143.5
132.8
115.9
101.3
78.2
66.6
56.8
43.4
32.3
30.6
11.8
8.0
2014 2019
bn $
Imports by product groups, 2014 and 2019
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Country trade view Germany · September 2015 7
Demand for products: origins of imports
The largest origin of German imports by far is the Netherlands, followed by France, China, Belgium and Italy.
In the case of the Netherlands and Belgium, re-exports play a significant role in their high ranking. In terms of product groups by country, the largest flows are road vehicles and transport equipment from France. Of this flow, more than 60% ($18bn) falls in the category “aircraft & associated equipment” and is explained by a large airplane manufacturer which has main production facilities in both Germany and France. Office, telecom and electrical equipment from China is second, while chemicals from Belgium are third. Fast growth for the next 5 years (significantly above the global import average of 3%), is expected to take place in import flows of miscellaneous manufactured goods and office, telecom, and electrical equipment from China. Chemicals from the Netherlands are also expected to grow fast.
Going forward, opportunities for exporters to Germany may well present itself in a number of fields. Firstly, Germany is the fastest ageing European country. Secondly, the country needs to tackle some weaknesses in infrastructure. Thirdly, the “Energiewende”, the transition towards sustainable energy, in which Germany is leading, is still in progress.
For the 32 partner countries distinguished
Source: Oxford Economics
Top 10 largest import flows by product and country of originGermany
Import product Origin import Value, $bn, 2014 Exp. Ann. Growth 2015-2019
Road vehicles & transport equipment France 28.40 4.9%
Office, telecom & electrical equipment China 26.72 6.5%
Chemicals Belgium 25.93 4.8%
Other manufactured goods Netherlands 24.12 5.1%
Basic food Netherlands 23.49 1.2%
Fuels Netherlands 23.48 -3.2%
Other manufactured goods China 21.08 6.6%
Office, telecom & electrical equipment Netherlands 20.34 1.1%
Chemicals Netherlands 19.70 5.9%
Other manufactured goods Italy 18.67 1.0%
Main origins of imports, 2014 and 2019
0
40
80
120
160
200
SwitzerlandAustriaCzech RepublicPolandUnited KingdomItalyBelgiumChina, P.R.FranceNetherlands
2014 2019
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Country trade view Germany · September 2015 8
Exports: key product groups
Germany is a world leader in exporting high-quality goods.
The country has over the past decade further improved on its competitive position: increasing productivity, effective outsourcing, and low wage growth helped further Germany’s manufacturing exports. The weakness of the euro is currently also helping the country’s export position.
Germany’s main export products reflect its strong technology industry. Exports consist mainly of road vehicles and transport equipment, miscellaneous manufacturing, industrial machinery and office, telecom & electrical equipment. The top 3 fastest growing product groups (2015-2019) are expected to be industrial machinery, road vehicles and transport equipment, and chemicals.
For the 32 partner countries distinguished
Source: Oxford Economics
0 50 100 150 200 250 300
Agriculture & raw materials
Beverages & tobacco
Fuels
Textiles
Ores & metals
Basic food
Other products
Pharmaceuticals
Chemicals
Office, telecom & electrical equipment
Industrial machinery
Other manufactured goods
Road vehicles & transport equipment
2014 2019
bn $
233.2
182.2
168.2
105.4
100.7
61.2
51.3
47.7
27.8
20.9
11.8
7.9
6.4
251.8
177.3
195.0
108.6
105.4
63.2
47.5
49.4
26.3
17.3
10.6
6.3
5.9
Key product groups, 2014 and 2019
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Country trade view Germany · September 2015 9
Exports: key destination markets
Germany’s largest export destinations are France, the US, the UK, China and the Netherlands.
Of these, exports to the US are expected to show particularly strong growth - given the weakness of the euro and comparatively higher expected demand growth in US - as well as exports to Poland.
Of the most important trade partners, trade barriers still play a significant role in the US (on meat, dairy, egg and plant products) and in China (restrictions regarding imports such as meat, pharmaceuticals and cosmetic products). In the case of the US, the ongoing TTIP negotiations may offer the opportunity to advance on settling these issues. Largest exports flows are road vehicles and transport equipment to the US, France, the UK, and China, industrial machinery to the US and China, and other manufactured goods to EU countries. Substantial growth is expected to occur in road vehicles and transport equipment, machines, and office and telecom equipment to China and wider emerging Asia (Vietnam, India) as well as pharmaceuticals to the region. It should be noted, however, that recent data, which are not yet incorporated in the forecasts, show rapid deterioration in Chinese (and regional) import demand. As Germany benefited more than other countries in Europe from the rise of China, given its comparative advantage in machinery, transport equipment and other manufactured goods, it is likely that Germany would also be above-average hit by a slowdown in China. Therefore, although the numbers don’t yet show a drop in German exports to China, particularly short-term exports to China and the wider region could disappoint. For the 32 partner countries distinguished
Source: Oxford Economics
Top 10 largest export flows by product and destination countryGermany
Export product Export partner Value, $bn, 2014 Exp. ann. growth 2015-2019
Road vehicles & transport equipment US 39.8 1.8%
Road vehicles & transport equipment France 37.5 -0.2%
Road vehicles & transport equipment United Kingdom 31.7 -0.1%
Other manufactured goods France 27.8 -3.2%
Industrial machinery US 25.6 3.1%
Road vehicles & transport equipment China 24.6 6.2%
Industrial machinery China 20.8 7.5%
Other manufactured goods US 20.0 0.5%
Other manufactured goods Netherlands 18.6 -3.1%
Other manufactured goods United Kingdom 17.5 -1.3%
Key destination markets of exports, 2014 and 2019
0
40
80
120
160
BelgiumSwitzerlandPolandItalyAustriaNetherlandsChina, P.R.United KingdomUnited StatesFrance
2014 2019
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Anke Martens Senior Economist +31 6 83 63 97 39 [email protected]
Carsten Brzeski Chief Economist, Germany+ 49 (69) 27 22 26 44 [email protected]
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