Germany: Exports slump challenge recovery hopes – ING

ING’s Carsten Brzeski notes that German exports and imports fell sharply in January, undermining earlier optimism about Germany’s 2026 growth outlook. He highlights that exports are broadly moving sideways and that trade data reveal Germany’s vulnerability to geopolitical shifts, including US tariffs and weaker Chinese demand. Despite this, ING still expects fiscal stimulus to support a rebound.

Trade weakness clouds growth outlook

"With exports and imports dropping in January, our optimism about Germany's growth prospects has taken a hit this week. We still expect the economy to accelerate this year on the back of fiscal stimulus, but this optimism won't survive if we continue to see macro data like this."

"German exports fell by 2.3% month-on-month in January, from +4.0% MoM in December. At the same time, imports dropped by 5.9% MoM, widening the German trade surplus to €21.2bn, the highest level since the summer of 2024. So much about rebalancing the export-oriented German growth model."

"Looking ahead, German exports still face rough headwinds. US tariffs are still weighing on exports and will probably only show their full impact this year, notwithstanding the new uncertainty since the Supreme Court’s ruling. At the same time, German exporters are currently facing a triple China shock: weaker demand for German products in China, increased competition from Chinese producers in third markets and Germany’s home market, the EU, and finally the dependence on Chinese rare earths."

"This morning's trade data adds to a very weak start to the new year for the entire German economy. Retail sales, industrial production, construction and trade were all down in January. After the surprise rebound of the economy in the final quarter of 2025, these data show that the road towards a sustainable recovery is still long."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)