German Exports Higher and Higher

Because of the European Central Bank's loose monetary policies, Germany’s foreign trade surplus is breaking its own records.
Hamburg port processed 145.7 million tons – a growth of 4.8 percent, in 2014.

Mario Draghi has led the European Central Bank for nearly three and a half years. Since then, the Italian has left no stone unturned in his efforts to keep the currency union together.

Now, with his zero-interest policy, his billions in support for banks and a government bond-buying program to start in March, Mr. Draghi hopes to prevent the euro zone’s northern and southern partners from drifting apart.

But it is not the weaker countries of the south that are primarily profiting from his actions. His monetary policy is a stimulus for Germany, the strongest national economy on the continent by far.

Thanks to the expansive monetary policy, German finance minister Wolfgang Schäuble can refinance at no charge on capital markets. Also, Germany’s export-heavy economy profits more and more because the euro is so weak.

The latest export statistics show that despite the Russian crisis and moderate economic growth globally, German companies exported more goods in 2014 than ever – worth €1.133 trillion, or $1.28 trillion. That’s a 3.7-percent increase from the previous year.

Germany’s much-criticized trade surplus also hit an all-time high, at €217 billion ($245 billion). Both the European Commission and International Monetary Fund have long reproached Germany for producing huge export surpluses at the cost of its weaker euro partners.

While total exports to other euro countries rose about 2.7 percent, exports to countries outside the currency union gained more than 10 percent, to €243 billion.

Sigmar Gabriel, the German minister of economic affairs, predicts 3.6-percent growth in exports in 2015.

Experts assume that the upward trend will continue this year.

“The weak euro indicates that German exporters will have a tailwind this year,” said Ralph Solveen, an economist with Commerzbank.

Sigmar Gabriel, the German minister of economic affairs, predicts 3.6-percent growth in exports in 2015.

Since Mr. Draghi started preparing markets last summer for his massive bond-buying stimulus, the euro has lost nearly 20 percent of its value against the dollar. The euro also lost against other currencies, including the Chinese yuan (minus 15 percent) and British pound (minus 8 percent). Morgan Stanley believes the euro could fall this year to the same value as the dollar.

Naturally the weak euro also helps crisis countries in the south. But it helps Germany even more. That’s because the share of exports outside the currency area is much greater for Germany than for southern European countries.

Overall, the euro area is seeing a smaller share of German exports, said Nils Jannsen of the Kiel Institute for the World Economy, or IfW. German deliveries to the euro zone were 36.5 percent of total exports, down from nearly 37 percent a year earlier. In the last 10 years, the share has declined more than 8 percent.

The euro zone is still Germany’s single biggest trade partners, however. In 2014, Germany exported goods worth €414.2 billion to currency union countries. Meanwhile, it imported €411.4 billion in products from elsewhere in the euro zone.

But trade with European countries outside the currency zone gained much more. Exports to E.U. countries outside the euro zone rose about 10 percent, while imports from those countries increased 6.6 percent.

By far the best foreign client of the German economy is France.  By the end of November, it had purchased goods worth €94 billion, according to the latest figures available.

Next come the United States, Great Britain and China.  Exports to the United States were up 8 percent last year, to China and Great Britain even 12 percent.

While the significance of the euro zone for Germany as a business market is declining, it is growing as a supplier for the economic powerhouse of Europe. For the second year in a row, the share of imports from the euro area rose in Germany.


Jens Münchrath and Axel Schrinner are based in the Handeslblatt Düsseldorf bureau. To contact. [email protected], [email protected].