Recruit Sales in Germany Update Bulletin November 2024

GERMAN ECONOMIC INDICATORS November 2024

Germany's gross domestic product unexpectedly increased in the third quarter, skirting a recession, but inflation rose more than expected in October, interrupting the downward trend in Europe's troubled largest economy. 

The economy is proving more robust than previously forecast, and the technical recession expected by many has failed to materialise so far.

Preliminary data from the Federal Statistics Office showed that the economy expanded by 0.2% in the third quarter compared to the previous three months, driven by government and household spending.

Inflation, however, resurged to 2.4%, against a forecast by analysts of 2.1% this month, after a year-on-year rise in consumer prices of 1.8% in September.

The pandemic and the war in Ukraine have accelerated Germany's structural weaknesses but are not the original reasons for the current situation. In a world in which, at least in manufacturing, China has become the "new Germany," Germany’s old macro business model of cheap energy and easily accessible large export markets is no longer working.

All the major car manufacturers in Germany are suffering, especially Volkswagen, which according to some news reports is looking to shed thousands of staff and shut down at least three production sites to cut costs.

Additionally,  news reports suggest that other automotive suppliers are planning to cut hundreds of jobs. If so, this is a big blow for the local automotive industry: the announcement by suppliers such as Schaeffler that it would cut thousands of jobs in Europe may have led to paralysis in some places. In Germany alone, apparently around 2,800 jobs are to be cut. Two of the five European locations are to be closed completely.

On a more positive note, last week’s rebound in the PMIs and the IFO index suggests that the German economy can at least avoid a severe recession and is rather likely to move horizontally over the coming months moving into 2025.

The main risks are possible US tariffs on European goods and a self-reinforcing negative loop on the back of more disappointing corporate news and few new policy answers from the German government.

German Exports November 2024

Weak exports and declining production are putting the German economy in difficult waters in politically turbulent times.

Germany is no longer as internationally competitive as a foreign trade nation, comments the President of the Federal Association of Wholesale, Foreign Trade and Services.

After an interim high in August, companies delivered fewer goods abroad again in September. According to preliminary figures from the Federal Statistical Office, exports with a total value of 128.2 billion euros were 1.7 per cent below the level of August 2024. There was also a decrease compared to September 2023 - of 0.2 per cent.

Growing competition for German products on the world markets, for example from China, as well as structural problems in German industry such as energy prices, which are high compared to international standards, have been causing problems for Germany as an export nation for some time.

According to the statistical authorities, from January to September of the current year, exports were 1,175.5 billion euros, 1.0 per cent below the value for calendar and seasonally adjusted terms.

Europe's largest economy needs a government capable of acting as quickly as possible, and at present the signs are that there will be new elections early 2025, and also in view of the re-election of Donald Trump as US President and the threat of import tariffs in the most important sales market for goods "Made in Germany".

Germany needs an economic turnaround and an effective government to do it.

Summary

If you are looking to recruit experienced sales staff to enable you to develop new or existing markets within Germany, the UK, Europe or further afield, please call us for a no-obligation discussion.

Some facts about Germany

Germany has a population of approximately eighty-four million people.

• Germany is the seventh-largest country in Europe. Covering an area of 137,847 square miles, of which 34,836 square miles is covered by land and 3,011 square miles contains water.
• The economy of Germany is a highly developed social market economy. The country accounts for about 28% of the euro area economy according to the IMF. 
• With a gross domestic product of 4,121 billion euros in 2023, Germany is the third largest economy in the world after the United States and China, making it the largest economy in Europe.
• Exports of motor vehicles and parts and chemical products in particular make Germany the third largest export nation in the world. At 70%, the service sector accounts for the largest share of the country's gross domestic product.
• Germany is one of the world’s premier locations for organising international trade fairs. Two-thirds of the major global industrial events take place in Germany. Ten million visitors attend around 150 international trade fairs and exhibitions each year.

Please note the information contained herein is an aggregate of news stories, by commentators widely available - readers should seek independent verification, and this in no way represents the views or opinions of Standley Associates.

We will continue to check the news reports and will provide monthly summaries of the trends