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TRADE

Expert says Germany to continue dominating global exports

The head of the German exporters’ federation, Anton Börner, said over the weekend that Germany stood a good chance of beating China to continue to be the world’s leading exporter in 2009 despite a deep recession.

Expert says Germany to continue dominating global exports
Photo: DPA

Börner said in an interview with newspaper Berliner Zeitung that China was suffering much more than Germany in the current global downturn because the Asian country’s exports consist of mainly consumer goods, for which global demand has plunged sharply. In contrast, Germany’s exports in key industrial goods will help the country better weather the crisis, Börner said.

But he admitted that despite having distinct advantages over China which would help it to continue being the world’s largest exporter, Germany would see its export industry lose steam in 2009.

Börner said he was confident that German exporters would hold their own amid buckling global demand because of the high quality of their products.

“We haven’t been the world’s biggest exporter for so many years because we’re German or because we’re so cheap. It’s because we’re the best,” he said.

Börner told the Tagesspiegel am Sonntag that China’s current slowdown didn’t pose a threat to German industry.

“The Chinese have to restructure their economy in the long run and they need new industrial facilities for that. That’s where German industry can step in.”

Earlier this week, new data showed that Germany’s 2008 trade surplus fell by 8.7 percent from 2007 to €178.2 billion amid weakening demand for automobiles and machine tools, hard-core components of German export might.

Another host of figures showed that the German economy shrank 2.1 percent in the fourth quarter of 2008, the worst decline since reunification and far worse than most analysts had expected.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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