Germany remained the world’s leading exporter in 2008. The bad news is that, during the first 2 months of 2009, German exports to the United States shrank by $4.1 billion or 27.4% from the same period in 2008.
Sometimes called the Great Recession, the slowdown in global trade seen together with the statistics presented below suggests two major weaknesses of the German economy.
First, Germany’s Gross Domestic Product may be too heavily tied to international trade. In 2009, Deutschland’s GDP was $2.863 trillion. Germany’s worldwide exports of $1.53 trillion plus imports of $1.2 trillion equal about 95% of its GDP. In contrast, exports and imports generate about 23% of America’s GDP.
The U.S. was the second-largest consumer for the $1.53 worth of German exports last year, accounting for about 7.5% of that total. Other leading trade partners for Germany’s heavily industrialized exports were France (9.7%), United Kingdom (7.3%), Italy (6.7%), Netherlands (6.4%), Austria (5.4%), Belgium (5.3%) and Spain (5%).
Germany imported about $1.2 trillion worth of merchandise and commodities in 2008, mostly from other European Union countries but also from China (6.2% of total imports) and the U.S. (4.5%).
German Balance of Trade with U.S. in 2008
Germany ran a $42.8 billion trade surplus with the U.S. last year. That represents a 3.8% decrease from the $44.5 billion deficit in 2007 and 6.4% decline from $45.8 billion in 2004.
The increase in U.S. imports to Germany and corresponding decline in German exports to America are partially due to a stronger euro currency and higher oil prices last year.
Germany’s second major weakness is may well be an overdependence on the precision engineering and manufacturing of automotive products such as Mercedes-Benz, Porsche, Audi and Volkswagen vehicles. Consider the following analyses of leading German exports and imports with the U.S.
Germany’s Top Exports to America
Over a quarter of Germany’s top 10 shipments to the U.S. last year involved automotive goods.
- New and used passenger cars … US$18.3 billion, up 5% from 2007 (18.8% of German exports to US)
- Medicinal, dental and pharmaceutical preparations … $9.3 billion, up 4.1% (9.5%)
- Other industrial machinery … $4.7 billion, up 10.3% (4.8%)
- Other scientific, medical and hospital equipment … $4.3 billion, up 1% (4.4%)
- Automotive parts and accessories … $3.9 billion, down 8.9% (4%)
- Engines and engine parts … $3 billion, down 12.7% (3%)
- Industrial compressors, engines, generators and pumps … $2.7 billion, up 14.8% (2.8%)
- Electric apparatus and parts … $2.3 billion, up 8.6% (2.4%)
- Measuring, testing and control instruments … $2 billion, down 2.3% (2.1%)
- Industrial organic chemicals … $1.97 billion, up 25.5% (2%).
Fastest-Growing German Exports to America
The fastest-growing exports into the U.S. from Germany include commodities and goods with much smaller dollar values than the top 10 exports. This suggests that Germany has not yet developed a competitive advantage in these producing these exports.
- Unmanufactured steelmaking materials … US$59.5 million, up 62.3% from 2007
- Feedstuff and foodgrains … $84.5 million, up 60.4%
- Drilling & oilfield equipment … $781.2 million, up 50.4%
- Railway transportation equipment … $52.9 million, up 48.8%
- Fertilizers, pesticides and insecticides … $454 million, up 41.6%.
Top Exports from America to Germany
Automotive products lead the list of top 10 items that Germany imported from America during 2008.
- New and used passenger cars … US$8.5 billion, up 18.4% from 2007 (15.5% of US-source imports)
- Pharmaceutical preparations … $5.6 billion, up 29.1% (10.3%)
- Civilian aircraft engines … $2.54 billion, up 15.9% (4.6%)
- Medicinal equipment … $2.52 billion, up 2.4% (4.6%)
- Semiconductors … $1.9 billion, down 8.9% (3.5%)
- Civilian aircraft parts … $1.7 billion, up 17.8% (3.2%)
- Other industrial machines … $1.6 billion, down 3.2% (3%)
- Other chemicals … $1.5 billion, down 4.5% (2.7%)
- Other precious metals … $1.376 billion, up 14.8% (2.5%)
- Measuring, testing and control instruments … $1.374 billion, down 1.1% (2.5%).
Fastest-Growing American Exports to Germany
Among the fastest-growing U.S. imports into Germany last year, soybeans generated the largest dollar value in terms of total shipments.
- Fuel oil … US$263 million, up 1,177% from 2007
- Other petroleum products … $156.9 million, up 183.6%
- Non-farm tractors and parts … $200.4 million, up 147.2%
- Military apparel and footwear … $43.3 million, up 144.2%
- Soybeans … $753.3 million, up 125.6%.
As a leading exporter, Germany stands to benefit from an improvement in the global economy. To be successful over the long term, world-leading German engineers need to develop more environmentally friendly and fuel-efficient automotive products such as electric and hybrid cars. That expertise should be also applied to innovations in other areas as well, such as robotics to purify water or recycle plastic materials.
See also Germany's Top Exports and Imports with US So Far in 2010.
Sources: This analysis is based on latest statistics from the US Census Bureau - Foreign Trade Statistics as of the date of article publication.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
Comments