German exports experienced a sharp decline at the end of the first quarter of 2023, with a drop in demand for its products from the EU, US and China all contributing to the fall.
Overall, exports from the EU's largest economy fell by 5.2 percent in March compared with the previous month, according to official figures from Desatis, the federal statistics agency. This put an end to two previous months of growth and resulted in stagnant trade for the quarter as a whole, defying previous predictions of a slight increase.
Shipments to the US suffered an especially large decline of 10.9 percent month-on-month, though it still remains the largest destination for German goods, with €12.5 billion worth of merchandise sent to the country.
Meanwhile, the figures for China and the rest of the EU were down by 9.3 percent and 6.2 percent respectively, again highlighting a drop in demand from Germany's biggest trade partners. Exports to other non-EU countries, however, experienced a smaller fall of four percent.
While some weakness in global markets had been expected, the drops were significantly larger than predicted. A previous poll by Reuters had forecast a dip of just 2.4 percent month-on-month.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, pointed to a slower than anticipated increase in shipments to China as one of the key reasons for this.
"We continue to see no evidence of China's reopening in these data," he said, adding that the figures for the second quarter may better reflect the loosening of restrictions as China continues its slow exit from its Covid-19 policies.
Thomas Gitzel, chief economist at VP Bank, also told Reuters that Germany's export-heavy environment continues to be impacted by turbulence in the global economy, which could be further hurt by an anticipated slowdown in the US.
However, some commentators still expressed optimism for the months ahead, with Alexander Kruger, chief economist at Hauck Aufhauser Lampe Privatbank, stating to Reuters: "Export levels are high, material shortages are decreasing and export expectations are improving."
