German Economy: Exports decline more than anticipated

German exports decreased more than anticipated in October, according to official statistics released on Friday, as rising prices, declining international demand, and stressed supply chains boost the possibility of a wintertime recession in Europe’s largest economy.

Amazingly, Germany manages its economy in a manner that defies logic and is hardly a recipe for prosperity. However, Germany is the industrial powerhouse of Europe and the second-largest exporter in the world. Germany has single-handedly prevented the Euro-zone from entering a new recession and is the only country with sufficient resources to save the euro.

Only the Dutch work fewer hours than the Germans among the OECD’s 34 members, while Italian students spend 25% less time in the classroom. These astounding numbers are made possible by the fact that the Dutch workforce is six times more productive than that of other European nations.

According to figures from the Federal Statistics Office, exports decreased by 0.6% on a monthly basis, which is twice as much as economists had projected in a Reuters survey. In October, imports decreased by 3.7% as well, improving the trade balance by 6.9 billion euros ($7.26 billion). The expected decline in imports was 0.4%.

More economic information is published in a thorough table by the statistics office. According to the German Chambers of Commerce and Industry (DIHK), nearly half of German exporters anticipate a worldwide economic slowdown, which will likely cause a 2% decline in exports for Germany in 2019.

Fears of potential gas rationing in industry have been allayed by Germany’s nearly full gas storages, and the third-quarter growth rate of 0.4% suggested a milder recession than many economists had initially predicted.

Why then does the German economy have such sway?

Beginning with a standard currency. When Germany accepted a far weaker currency than it otherwise would have. In the example of the Deutsche mark, which would be significantly stronger today than the euro. It allied with more lethargic countries in southern Europe. Making its goods more affordable on international markets.

The relatively low levels of private debt are another significant factor in the German economy that is equally significant. German businesses and individuals refused to spend more than they could afford during the 1990s and 2000s. However, the rest of Europe gorged itself on cheap money. Real interest rates in Germany stayed stable. In contrast to those in other economies where zero interest rates were frequent, which is one explanation for this.

Your currency must be valued less in order to make it more profitable for other countries to import from you. The Euro to Deutsche Mark exchange rate was 1 to 1.95. The Euro was worth more than the Deutsche Mark. Therefore, it is illogical that their exports will increase after the introduction of the Euro. However, because the French and Italian currencies were even less valuable than the Deutsche Mark. Also because they all switched to the Euro. Germany suddenly became the most alluring country to purchase goods from.