German exports rose in December while industrial output fell more than expected, suggesting the outlook for the euro zone’s largest economy remains anything but rosy.
Exports rose 2.9% compared with the previous month, data from the federal statistics office showed on Friday. Economists in a Reuters poll had forecast a 0.6% decrease.
For all of 2024 exports contracted 1.0% compared with 2023 due to weak demand from China, following another contraction in 2023.
Imports saw a decline of 2.8% and the foreign trade balance showed a surplus of 241.2 billion euros in 2024.
Increased competition from abroad, high energy costs, still-high interest rates and an uncertain economic outlook have taken their toll on Germany’s economy, which contracted in 2024 for the second year in a row.
The government is forecasting a 0.3% decline in exports this year, which would mark the third straight year of decline, due to weakening competitiveness and growing geopolitical and trade tensions.
The BDI industry association said Donald Trump’s return to the White House and his tariff threats could mean the country’s export-oriented economy shrinks almost 0.5% in 2025.
In December, exports to other EU countries rose 5.9% on the month, while exports to countries outside the EU fell 0.5%. Imports rose 2.1% on a calendar and seasonally adjusted basis compared with November.
The foreign trade balance showed a surplus of 20.7 billion euros ($21.5 billion) in December, up from 19.2 billion euros in November 2024.
INDUSTRY IN POOR HEALTH
Meanwhile, German industrial production fell more than expected in December, decreasing by 2.4% compared with the previous month, the federal statistics office said on Friday.
Analysts polled by Reuters had predicted a 0.6% fall.
Revised data showed that production grew 1.3% in November 2024 compared with October, less than the 1.5% previously reported earlier, the statistics office said.
Industrial production remains about 10% below its pre-pandemic levels, said Carsten Brzeski, global head of macro at ING.
“Today’s industrial data once again underlines that industry has been and will remain a drag on German growth,” Brzeski said.
The less volatile three-month on three-month comparison showed that production was 0.9% lower in the period from October to December 2024 than in the previous three months.
Industrial orders rose 6.9% on month in December due to substantial growth in large-scale orders such as aircraft, ships, trains and military vehicles, the federal statistics office said on Thursday.
Andrew Kenningham, chief Europe economist at Capital Economics, said there could be a rebound in auto production in the near term and falling interest rates may support business investment in the coming months.
But he noted that business surveys such as the Ifo index remain very low and the rebound in the price of European natural gas since mid-December will add to costs for energy-intensive firms.
“All told, the structural decline in German industry looks set to continue,” Kenningham said.
($1 = 0.9638 euros)
(Reporting by Maria Martinez）
