German Exports Increase in December Despite Declining Industrial Output

German exports rose in December, but industrial output fell, suggesting that the nation’s economic recovery may face difficulties.

While industrial output declined more than anticipated in December, German exports increased, indicating that the prognosis for the largest economy in the euro zone is still far from promising.

According to figures released Friday by the federal statistics office, exports increased 2.9% over the previous month. A 0.6% decline was predicted by economists in a Reuters survey.

Because of the poor demand from China, shipments fell 1.0% overall in 2024 after declining again in 2023.

In 2024, the international trade balance recorded a surplus of 241.2 billion euros, while imports decreased by 2.8%.

Germany’s economy shrank in 2024 for the second consecutive year because to a combination of factors, including increased foreign competition, rising energy prices, persistently high interest rates, and an unclear economic future.

Due to deteriorating competitiveness and rising geopolitical and commercial tensions, the administration predicts a 0.3% drop in exports this year, the third consecutive year of loss.

Donald Trump’s return to the White House and his tariff threats, according to the BDI business organization, might cause the nation’s export-driven economy to contract by about 0.5% in 2025.

Exports to non-EU nations decreased 0.5% in December, while exports to other EU nations increased 5.9% for the month. In comparison to November, imports increased 2.1% on a calendar and seasonally adjusted basis.

The international trade balance increased from 19.2 billion euros in November 2024 to a surplus of 20.7 billion euros ($21.5 billion) in December.

In the meanwhile, the federal statistics agency reported on Friday that German industrial production dropped 2.4% in December, more than anticipated.

Reuters surveyed analysts who forecasted a 0.6% decline.

According to the statistics office, output increased 1.3% in November 2024 compared to October, which was less than the 1.5% growth originally reported.

ING’s global head of macro, Carsten Brzeski, stated that industrial production is still around 10% below its pre-pandemic levels.

Brzeski stated, “Today’s industrial data once again highlights that industry has been and will continue to be a drag on German growth.”

According to the less erratic three-month-on-three-month comparison, production decreased by 0.9% during the October–December 2024 period compared to the preceding three months.

The Federal Statistics Office said on Thursday that industrial orders increased 6.9% in December as a result of significant increases in large-scale orders for military vehicles, ships, trains, and airplanes.

According to Andrew Kenningham, chief Europe economist at Capital Economics, vehicle manufacturing may soon recover, and in the upcoming months, declining interest rates may encourage corporate investment.

However, he pointed out that business surveys like the Ifo index are still very low and that energy-intensive businesses will have to pay more now that the price of European natural gas has recovered since mid-December.

According to Kenningham, “the structural decline in German industry looks set to continue.”