Export malaise hits Germany as EU economic heavyweights struggle

German exports slowed in the first half of the year, adding to European economic jitters. (Reuters)
Updated 10 August 2019

Export malaise hits Germany as EU economic heavyweights struggle

  • German industrial output fell 1.5 percent in June from May

BERLIN: Momentum in German exports slowed in the first half of 2019 and abruptly reversed in June, adding to signs of broad-based weakness in an economy increasingly relying on domestic demand to eke out even meager growth.

A global growth slowdown accompanied by tariff disputes and uncertainty over Brexit has affected growth across western Europe, but Germany's traditionally export-reliant economy  has been particularly vulnerable.

Those headwinds have been offset by stimulus at home, where record-high employment, inflation-busting wage hikes and low borrowing costs have driven a consumer and construction boom.

However, that may not prevent German GDP — for which preliminary data is due on Wednesday — from joining Britain in having contracted in the three months to June.

Reflecting the foreign/domestic split, Germany's trade surplus narrowed to €109.9 billion ($123 billion) from €122.4 billion in the half year to June as imports rose 3 percent and export growth slowed to 0.5 percentfrom the previous six months, Federal Statistics Office data showed.

In June, exports fell 0.1 percent from May while year on year they plunged 8 percent to mark their steepest rate of annual decline in nearly three years — and the DIHK business association said it expected exports to nearly stagnate in 2019 as a whole.

“Rising protectionism and a noticeably weakening global economy are burdening Germany’s export-reliant economy,” DIHK economist Volker Treier said.

“The US trade dispute with China and the tenacious struggle for Brexit are unsettling investors worldwide and clouding the prospects for German producers.”

June also marked a potential watershed for industrial output in both Germany and in Europe's third largest economy, France.

German output fell 1.5 percent from May, data showed on Wednesday, while corresponding figures from France on Friday showed a drop of 2.3 percent. Both readings were weaker than expected.

Both countries’ export sectors,  including their high-profile car industries, have been hit by flagging demand from China as its trade dispute with the US has deepened.

“We no longer expect the Chinese government to significantly boost its stimulus package,” Commerzbank economist Joerg Kraemer said. “Instead, it accepts the growth loss that comes with the trade war.”

Citing weaker demand from emerging markets and from China in particular, the bank’s economic research team cut its 2020 growth forecast for the German economy to 0.8 percent from 1.3 percent previously.


Saudi finance minister reassures public on taxes

Updated 10 December 2019

Saudi finance minister reassures public on taxes

  • Mohammed Al-Jadaan: There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully
  • The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year

RIYADH: Saudi finance minister Mohammed Al-Jadaan pledged that there would be no more taxes or fees introduced in the Kingdom until the social and economic impact of such a move had been fully reviewed.

He was speaking at the 2020 Budget Meeting Sessions, organized by the Ministry of Finance and held in Riyadh on Tuesday, where a number of ministers and senior officials gathered following the publication of the budget on Monday evening.

“There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully, especially in terms of economic competitiveness,” said Al-Jadaan.

The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year and more than 10 percent higher than the expected budget for this year. 

Most of that increase has come from taxes on goods and services which rose substantially as a result of the improvement in economic activity over the year.

The reassurances from the minister come as the Saudi budget deficit is estimated to widen to about SR187 billion, next year, or about 6.4 percent of GDP.