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argumente Germany’s export strength – bad for Europe? The high level of competitiveness and the high current account surpluses of the German business sector have been criticised abroad and especially within the eurozone. The main points of criticism are: Germany is too focused on its export industry and widely ignores domestic demand and private consumption. The wage restraint has led to inappropriately low wages, which reduced unit labour costs and allowed Germany to dump goods on eurozone member states’ markets. The rise of the export share serves as a proof for the imbalances in foreign trade. The export share sky-rocketed from 21.5 % of gross domestic product (GDP) in 1995 to 39.5 % in 2015. Mistake: Germany’s consumption is low. As in previous years private consumption is one of the main pillars of economic growth (spring report of the leading german economic research institutes, 2016). Based on good frame conditions like the high employment rate, grown wages and the low oil price, private consumption is a major growth driver. According to the springreport (2016) domestic demand will contribute 1.7 percentage points to GDP growth in 2015. Foreign trade is expected to have a negative effect on GDP growth (-1,0 percentage points). EU-countries benefit from Germany’s export strength Germany’s imports from eurozone member states bn € in % 39 150 38 Although Germany’s exports to partner countries within the eurozone have risen since the introduction of the euro, Germany’s exports to countries outside the eurozone have risen much faster. Germany’s export of goods to the eurozone was worth 433 bn. € in 2015. Countries which do not belong to the EU or the eurozone received goods worth 502 bn. €. 125 37 100 36 20 20 20 20 20 20 20 20 07 20 20 20 20 in % bn € 150 39 100 38 50 37 0 36 20 share of total exports 20 20 20 20 20 20 20 20 20 20 exports 14 40 15 41 200 13 250 12 42 11 300 10 43 09 350 07 44 08 400 06 45 05 450 04 Germany’s imports from eurozone countries have increased substantially over the past years. According to preliminary calculations, the German imports from eurozone countries ended the year 2015 by 15.5 % higher compared to the beginning of the recession at the end of the year 2007. 42 % of Germany’s imports originated from eurozone member states in 2004. This has fallen to round 37,7 % in 2015 only because the imports from the rest of the world increased even more. share of total imports Germany’s exports to eurozone member states 20 Fact: German imports from eurozone members are rising. imports 15 175 14 40 13 Fact: Germany’s export growth is driven mainly by non-eurozone countries. 12 41 200 11 42 225 09 43 250 10 44 275 08 300 06 45 05 46 325 04 350 Source: Federal Statistical Office of Germany, 2016 (preliminary calculations) argumente Germany’s export strength – bad for Europe? Fact: Germany is mainly exporting equipment, which helps our trading partners. More and more German companies import intermediate goods from eurozone countries. Because increasingly more final products are exported to emerging markets, our partner countries in the eurozone are benefiting from Germany’s strong export economy, too. Thus, by rising German exports import numbers from the eurozone are rising as well. A 10 % increase of German exports leads to a 9 % increase of intermediate goods imports to Germany from other EU-Member-States (IW Cologne). Globalized economies are strongly affected by global value chains. Germany’s domestic value added content of its exports is just around three-fourths (OECD). The remaining value added is gained by imports. Typically, the German economy exports capital goods. By investing in modern machinery and equipment the production potential abroad can be increased. Although Germany’s industrial labour costs have considerably gone up over the past five years Germany’s industrial labour compared to the European Union costs have gone up over the average in 2015 the high quality past five years compared to of German products convinced the EU average our trading partners. Imports from eurozone member countries rose during the last 10 years Mistake: Germany’s competitive strength marginalises eurozone members. Percentage increase between 2004 and 2015 selecetd countries Euro area in percent Slovenia 47,4 Netherlands 42,2 Slovakia 52,6 Austria 16,4 Belgium Spain Luxemburg 1,6 9,7 France 6,6 37 Greece –11,8 Ireland –36,9 China 62,2 India 58,9 Russia Established OECD countries 28,2 Italy Portugal Emerging countries 1,7 The table on the left illustrates the imports of Germany’s trading partners. Apparently imports from our eurozone partner countries significantly rose between 2007 and 2015. The German collective bargaining parties have ensured that wages generally only rise as strong as productivity improves. Other countries in the eurozone did not follow this principle in the past and have thus weakened their competitiveness. 3,1 Brasil 0,2 USA 28,9 Japan –17 Source: Federal Statistical Office of Germany 2016 (preliminary calculations), own calculations Publications (German) and Contact Volkswirtschaftlicher Argumentendienst: Die deutsche Volkswirtschaft in der Globalisierung VAD Nr. 60, Januar 2008 kompakt: Deutschlands Leistungsbilanzüberschuss BDA | DIE ARBEITGEBER Bundesvereinigung der Deutschen Arbeitgeberverbände Volkswirtschaft | Finanzen | Steuern T +49 30 2033-1950 [email protected] www.arbeitgeber.de Juli 2016
