Poland has become the fifth most important trading partner of the German economy and has overtaken Great Britain. Despite the meanwhile heavy burdens from the Corona restrictions, German-Polish trade only fell by a minimal 0.4 percent to 123 billion euros in 2020. “When the EU expanded, Poland was still seen as an economic problem child. Now, thanks to German investments, it is an industrial powerhouse of the EU,” said Oliver Hermes, Chairman of the Committee on Eastern European Economic Relations.
While Poland’s importance is growing, Britain’s is declining. The disputes over Brexit rules, the delicate border between the euro country Ireland and British Northern Ireland and now the quarrel over the import of British mussels into the EU are straining relations. The British trade volume with Germany fell by 13.2 percent to 102 billion euros.
China is Germany’s most important trading partner for the fifth time in a row. As the Federal Statistical Office announced on Monday, according to preliminary results, goods worth 212 billion euros were traded between the two countries. Despite the corona crisis, sales with China rose by 3.0 percent. In second and third place are the Netherlands with 173 billion euros (-8.7%) and the United States with 171.6 billion euros (-9.7%). The USA remains the largest buyer of German exports.
For the eleventh time in a row, the most important export goods of Germany were cars and car parts. However, the corona crisis led to an extraordinarily strong decline to 187 billion euros (-16.9%). As usual, Germany had the highest export surpluses alongside motor vehicles, machinery and chemical products. On the import side, textiles or consumer goods were not in the lead, but data processing equipment and optical products with 114 billion euros (-3.8%).
Overall, Germany’s economy remains extremely export-oriented. Goods to the value of 1,205 billion euros (-9.3%) were exported and goods to the value of 1,026 billion euros (-7.1%) were imported. The foreign trade balance closed with a surplus of 179 billion euros. The German export surplus thus fell for the fourth year in a row. It is now 5.4 percent of the gross domestic product (GDP). In doing so, Germany continues to violate the EU’s stability criteria, according to which member states should have a balanced trade balance in the long term. That means exporting as many goods and services as other countries demand. Of course, the so-called European semester only stipulates that the difference between exports and imports should not exceed 6 percent of a country’s GDP. However, the Federal Republic has already done this several times in recent years. The corona year showed the two sides of the export strength of the industry. On the one hand, production fell twice as fast as GDP; on the other hand, the economy benefited from the rapid recovery in demand from China. In December, for example, exports rose again compared with November, despite the tightened lockdown.
The longer than initially expected lockdown, winter-related losses and production disruptions caused by the supply problems with chips could still slow down foreign trade in the first quarter. In the summer half of the year, however, bank analysts and economists continue to expect a significant recovery, which is likely to be driven by strong global demand, expansive monetary and fiscal policy and, not least, by the pent-up consumer demand of German households.
Further changes will change retail in 2021. Verdi chairman Frank Werneke speaks of the new supply chain law as a »breakthrough«, while environmental groups speak of a »minimal consensus«. In any case, the law, which will come into force in 2023, already forces companies to accept the new rules and future tightening.
EU trade policy also offers new approaches. The European Commission presented the “Trade Policy Review” last week. This strategy document is intended to initiate a realignment. The increasing importance of climate protection and digital services, reform approaches for a powerful World Trade Organization (WTO) and the changed role of China should be reflected in future trade policy.