28.01.2025 15:33
The export expectations of companies in Germany fell to their lowest level in the past year in January, despite the recovery in the global economy. According to data from the Ifo Institute for Economic Research, the Industrial Export Expectations Index dropped from minus 6.1 to minus 7.3. There is particularly a negative outlook in the automotive sector.
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Recently, Germany, one of the largest countries in Europe facing consecutive economic problems, is now at risk of recession. The term "sick man," which was used for the Ottoman Empire during its weakest periods, has become frequently used for Germany these days. Indeed, despite the global economic recovery at the beginning of the year, companies' export expectations in Germany fell to the lowest level in a year in January.
THE ECONOMY IS ALARMING
The Institute for Economic Research (Ifo) published the results of the January export expectations survey for Germany. Accordingly, the Industrial Export Expectation Index, which was minus 6.1 in December 2024, decreased by 1.2 points to minus 7.3 in January. Thus, the index carried its decline into the seventh month and fell to the lowest level in a year. Klaus Wohlrabe, the head of the Ifo Surveys Center, stated in his assessment on the matter, "The beginning of the year for exports was disappointing. The positive momentum abroad has not yet had a significant impact on domestic exporters." Wohlrabe also noted that the potential tariff threats from the Donald Trump administration, which began in the U.S., have put downward pressure on the "sensitivity" of the German industry.
THE CRISIS IS MOST PRONOUNCED IN THE AUTOMOTIVE SECTOR
According to Ifo, a decline in exports is expected in many major industrial sectors. The situation does not look bright, especially for the automotive sector. Meanwhile, Donald Trump, who began his presidential term in the U.S. on January 20, had announced that he would significantly increase tariffs to reduce the trade deficit and support domestic production. Analysts indicate that Trump's more protectionist policy through tariffs on European Union imports is not a good sign for the export-driven German economy. The U.S. is the largest buyer of German goods, with Germany exporting about 10% of its exports to the U.S.
RECESSION LOOMS FOR THE GERMAN ECONOMY
On the other hand, the German economy recorded a contraction for the second consecutive year due to increasing competition from China and structural problems that have slowed the economy. If the economy, which shrank by 0.1% in the last quarter of last year, also contracts in the first quarter of 2025, it will enter a technical recession, defined as two consecutive quarters of contraction. Analysts expect only slight growth for the German economy in 2025 due to "political uncertainty and increasing competition from Asia, especially China."
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