German firms expect robust exports in 2012

Germany, the world's number two exporter, expects healthy growth in foreign demand for its goods thanks to booming emerging markets and a nascent US recovery, according to a report on Monday.

German firms expect robust exports in 2012
Photo: DPA

News magazine Der Spiegel cited a new poll for the German Chambers of

Commerce and Industry (DIHK) among 3,200 firms forecasting a four-percent rise

in exports in 2012.

The figure was down slightly from the average over the last 10 years of nearly six-percent growth in exports, traditionally the backbone of Europe’s top economy, Der Spiegel said.

“Companies’ expectations for business abroad are cautiously optimistic,” the study said, as quoted by the magazine.

Several firms said they expected the market to improve in the course of the year despite the looming eurozone debt crisis, with the best prospects in the so-called BRIC countries: Brazil, Russia, India and China.

They also cited signs of improvement in the United States as it struggles to return to robust growth. German firms were pessimistic, however, about demand from crisis-hit European countries.

The report said the DIHK found that German companies with production facilities at home and abroad were hiring more staff in Germany than at their foreign sites.

“That means foreign investment is a significant boost to Germany as a place to do business,” Der Spiegel quoted the study as saying.

Earlier this month, official data showed that the German trade surplus grew in November as foreign demand for German-made products remained surprisingly robust.

Germany exported goods worth €90.7 billion ($119.9 billion) in seasonally-adjusted terms in November, 2.5 percent more than in October, the national statistics office Destatis said.

Chancellor Angela Merkel will embark Wednesday on a two-day visit to China, the world’s top exporter, for talks with Premier Wen Jiabao and President Hu Jintao.


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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.


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.