New economic data released on Thursday has revealed that stronger exports of German products to the United States have managed to save the European country from recession during the third quarter. The increase in export volumes from Germany has been attributed to the now weaker value of the euro and the shift in the global supply chain due to the ongoing trade dispute between China and the United States.
According to the US Federal Statistics Office, the demand for German products by the country still remains to be strong despite its ongoing trade dispute with the European Union. US President Trump recently threatened to impose new tariffs on automotive products and vehicles, including those coming from Germany. Despite the threat of possible tariffs, German's exports to the US still remained unaffected throughout the third quarter.
Germany saw a 0.1 percent expansion in the third quarter, narrowly escaping recession. The country managed to report better figures on the back on increased state spending, construction, consumption, and stronger exports. Total exports in Germany rose by 1.7 percent for the third quarter when compared to the same period last year. This was a welcomed growth given the 1.3 percent year-on-year decline in exports during the second quarter of this year.
Data shows that the country's two largest customers remain to be France and the United States. Germany's exports to the United States saw a growth of 7.6 percent for the third quarter when compared to the same period last year. This was a substantial growth from the 5.3 percent year-on-year increase in the second quarter. Meanwhile, Germany's exports to France for the third quarter rose by 3.1 percent year-on-year.
Economists have stated that Europe and particularly Germany have benefited from the US' ongoing trade dispute with China. The tit-for-tat measures imposed by both countries have forced US companies to look for other suppliers outside of China, with most companies diverting orders to European exporters. The US main imports from Germany included mostly machinery and pharmaceutical products.
Germany is also benefitting from the recently imposed reforms and fiscal stimulus measures by French President Emmanuel Macron. The measures managed to increase France's demand for German products such as machinery, airplanes, cars, and electronics.
The recent depreciation of the euro against the dollar has also helped in the decision-making process of US companies to go with European suppliers. Since the start of 2018, the euro has depreciated by around 14 percent against the US dollar. This, along with the previously mentioned factors, has caused a massive trade diversion.
