German trade group sounds alarm as exporters stare down recession

German exporters are facing a recession and the country's economic model is coming under "massive pressure", the BGA trade lobby said on Wednesday, as new forecasts indicated a further deterioration in foreign trade.

For 2024, the Federation of German Wholesale, Foreign Trade and Services (BGA) expects exports to continue to fall, contracting by 0.3%, while imports are set to shrink by 2.0%.

BGA president Dirk Jandura called the forecasts a wake-up call for the German government, saying that roughly 70% of the businesses surveyed said Berlin's measures went in the wrong direction or that its response did not go far enough.

"German foreign trade is facing a recession. We are caught in a vice between global economic weakness on the one hand and domestic weakness on the other. Our economic model is under massive pressure," he said.

Germany's economy, the worst-performing major economy last year, is heavily oriented towards exports, which Berlin has said account for one in every two euros made in the country.

German Economy Minister Robert Habeck warned last month that foreign trade would likely be subdued for the foreseeable future due in part to its strong reliance on China.

CONCERNS ABOUT KEY PARTNERS

Concerns abound among BGA's several hundred members, from weak growth in the EU internal market, persistently poor figures from China and the results of the U.S. election, Jandura said.

Sentiment has dropped significantly since the first half of the year, and exporters are sceptical that there will be a recovery in the second half, with the assessment of future business expectations at its lowest level to date, he added.

"The EU must prepare itself, regardless of who wins in Washington in November," with a response to the 'America First' strategy that the new president will certainly pursue, said Jandura.

China also needs to be dealt with honestly, he added. Competition-distorting subsidies cannot be tolerated, but a lot is at stake in the customs dispute as well, Jandura said, who called for solving problems by talking and without escalation.

"The levers for saving our model of the export nation are obvious. We need less bureaucracy, fewer burdens and, above all, a clear commitment and the courage to engage in more free trade," said Jandura.