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TRADE

Exports to crack €1 trillion in 2011

German exports are set to crack the €1-trillion mark for the first time history this year despite turbulence hitting the global economy and the simmering eurozone debt crisis.

Exports to crack €1 trillion in 2011
Photo: DPA

Exports, the driving force of Europe’s biggest economy, will grow by 12.0 percent in 2011 compared to last year, to reach €1.075 trillion ($1.43 trillion), the BGA exporters’ federation said on Tuesday.

Their value next year is expected to rise to €1.14 trillion. This rate of growth is “absolutely within the long-term average”, BGA president Anton Börner told reporters.

Emerging markets will remain a strong outlet for German exporters, despite an expected slow down in global trade in the coming months due to the eurozone debt crisis and US economic gloom, he said.

“They continue to invest massively in the technologies of the future”, in energy sectors as well as telecommunications and transport infrastructure, Börner said.

He said those markets included not only the emerging giants of Brazil, Russia, India and China, but increasingly also fast-growing partners such as Indonesia, Saudi Arabia, Peru and Ecuador.

However, he warned that, with 60 percent of German exports currently going to its neighbouring trading partners, if the eurozone debt crisis worsened further “all forecasts will be null and void.”

And he urged European leaders to send “clear political signals,” adding that “the fact we are profiting massively from the euro doesn’t mean we have to accept any old horse-trading simply to save the single currency.”

Germany is insisting on a tightening of Europe’s budgetary discipline as a condition for helping struggling countries.

AFP/The Local/mry

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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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