Germany’s BGA trade association slashed its 2016 forecast for export growth, its head said yesterday, predicting sales abroad by Europe’s biggest economy would later stagnate as the delayed impact of Brexit hit home.
Global demand for German goods has slowed significantly, with the UK’s decision to leave the EU among several factors increasing uncertainties and complicating investment decisions, Anton Boerner said.
“The repercussions (of Brexit) will impact us massively in the near future,” he told Reuters in an interview.
That effect had yet to be felt in the export sector, which the association forecast in April would grow by 4.5% this year.
“I (now) think growth of only between 1.8% and 2% percent is feasible this year,” Mr Boerner said.
Exports - traditionally the main driver of Germany’s economy - had increased by 6.5% as recently as 2015, but Mr Boerner said the outlook beyond 2016 was bleak.
“Exports are set to stagnate, possibly as early as 2017 if viewed pessimistically,” Mr Boerner said.
“We’re hitting the ceiling.”
Germany releases trade figures next week for July, which are likely to show the first clear evidence of fallout from the Brexit vote.
German exports to Britain, its third most important market, stagnated year on year in the first six months at around €44.8bn.
Further afield, Germany’s trade prospects are also clouded by uncertainty about the US presidential election, the rise of nationalist movements in Europe, and other crises including the failed July 15 coup in Turkey and the civil war in Syria, Mr Boerner said.
Exports to the US and France, Germany’s two biggest markets, fell 4% to €53.4bn and 2% percent to €52.1bn respectively in the first half.
Demand from emerging markets was subdued, with exports to China only inching up 1% and Brazil falling by almost a fifth.
Strong demand from other EU countries drove export growth in 2015 and, overall, net foreign trade contributed 0.2 percentage points to GDP growth of 1.7%.
The government and Germany’s central bank predict the same growth rate this year, helped by soaring domestic demand, while exports are already not expected to contribute much.
Meanwhile, Germany’s 10-year bund yield yesterday rose to its highest level since the UK’s vote to leave the EU, as hawkish comments from the US Federal Reserve were seen leaving the door open for a rate hike as early as next month. The yield rose more than 6 basis points to minus 0.025%.
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