German Exports Rise in December, But Industrial Output Signals Economic Struggles

Germany's exports increased by 2.9% in December, defying economists' expectations of a 0.6% decline, according to the federal statistics office. However, for 2024, exports fell by 1.0% due to weak demand from China, following another contraction in 2023. Imports dropped 2.8%, with the foreign trade surplus reaching €241.2 billion.

Despite the December boost, Germany’s economy remained under pressure from high energy costs, tight monetary policy, and geopolitical uncertainties. The government predicts exports will decline another 0.3% in 2025, marking a third consecutive year of contraction. The BDI industry association warned that potential tariff threats from Donald Trump’s administration could shrink Germany’s export-driven economy by 0.5% next year.

Exports to EU nations rose 5.9% in December, while non-EU exports dropped 0.5%. Imports increased 2.1% compared to November, bringing the monthly trade surplus to €20.7 billion, up from €19.2 billion.

Meanwhile, German industrial production declined by 2.4% in December, exceeding analysts’ expectations of a 0.6% drop. Revised data showed a 1.3% rise in November, slightly lower than previously reported. Industrial production remains 10% below pre-pandemic levels, with experts warning of continued stagnation.

Large-scale orders, including aircraft and military vehicles, drove a 6.9% increase in industrial orders. However, weak business sentiment, rising natural gas prices, and structural challenges suggest prolonged difficulties for Germany’s manufacturing sector. While auto production may see short-term recovery and lower interest rates could support investments, analysts anticipate further industrial decline.