Germany feels the economy is in recession
German exports to China fall 11%
Germany, Europe’s largest economy, has been a bit uneasy recently because of a decline in its exports to China. According to data, in the first four months of this year, Germany’s exports to China fell by 11.3% year-on-year. In fact, of all the European countries, Germany is the most anomalous one, because most countries have increased their exports to China this year. Statistics show that in the first quarter of this year, exports to China from the EU member states increased by 2.9% year-on-year. The drop in Germany meant that China accounted for just 6% of total German exports in the first three months of the year. This is not the same as Germany’s previous expectations. Germany had previously expected that its manufacturing sector would benefit from a boost in Chinese demand after China fully opened up this year.
German automakers are losing market share in China
Now, the global auto market has slowly shifted to electric vehicles, and Chinese people are also inclined to buy electric vehicles. However, German manufacturers are still mediating on fuel vehicles. It is reported that among several large German companies with a large amount of business in China, automaker Volkswagen and auto parts maker Bosch both announced a sharp decline in sales in China in the first quarter. Data show that Volkswagen’s deliveries in China fell by 15% in the first quarter of this year.
Chemical and energy-intensive companies are being affected by high electricity prices
While gas prices in Europe have fallen sharply from last year’s peak, they remain higher than in previous years, leaving some energy-intensive companies at a continuing disadvantage. Due to the energy crisis, the output of chemicals has dropped sharply, and the competitiveness of German chemical groups has been permanently hit.
German manufacturing PMI shrinks to a three-year low
According to the latest data, the preliminary statistics of the manufacturing PMI in the eurozone in May unexpectedly fell to 44.6, which was lower than the market expectation of 46, further below the 50 levels of prosperity and contraction indicating economic contraction, and fell to 36 Monthly lows. Eurozone May services PMI also fell, although 55.9 still indicated strong economic growth and was higher than market expectations of 55.6. From the perspective of countries in the eurozone, the initial value of Germany’s manufacturing PMI in May was 42.9, the new lowest data since May 2020. The manufacturing PMI in France in May was 46.1, slightly exceeding expectations, and the service PMI and neutralization PMI were both lower than expected.
Germany’s GDP shrank by 0.3% in the first quarter
On the 25th, data released by the German Federal Statistical Office showed that the country’s seasonally and price-adjusted GDP shrank by 0.3% in the first quarter of this year. This is also the second consecutive quarter of economic contraction in Germany following a 0.5% quarter-on-quarter decline in GDP in the fourth quarter of last year, which also means that the EU’s economic locomotive has entered a technical recession. From a year-on-year perspective, since Germany’s GDP recorded a substantial growth of 4.1% in the first quarter of last year, the year-on-year growth rate has been falling all the way. In the past four quarters, the year-on-year growth rates of Germany’s GDP were 1.7%, 1.3%, 0.2%, and -0.2% in the first quarter of this year.
Recently, according to statistics, Germany is already the worst-performing economy in the G7 group including the EU, and it is also the only country among major economies that has fallen into a technical recession in the past year.
