Exporting €1.56 trillion in 2023, 47% of its GDP, the Germany economy has benefitted greatly from European integration and from the tailwinds of globalization over the last 20 years
The exchange rate adopted on introduction of the euro in 1999 has been an implicit devaluation of the Deutsche Mark, propelling German exports in Europe, which has remained its main market (stable at 54.2% of exports to EU-28 in 2023), and around the world
On foreign export markets, in 2023, the U.S. came first (10.9%), followed by France (8%), the Netherlands (7.6%) and China (notably down at 6.7% from 9% in 2021)
The strong presence of German exports to Poland (6.1%) stands out, followed by Eastern Europe countries the Czech Republic, Hungary, Romania and Slovakia
Globalization is being thrown into reverse, China’s economy signals weakness, the U.S. markets anticipate stagflation and the war in Ukraine compounds uncertainties in Europe
On the supply side, the cost of energy, the boost to defense spending, and ambitious investments to substitute for Russian gas (LNG stations and expanding renewables) all point to a potential loss of industrial competitiveness
A marked increase in foreign trade balance in the first half 2024 (+28.7% vs 2023) signals a severely weakening economy with imports dropping by 6.2% (vs exports decreasing by only 1.6%)
“Zeitenwende” according to Chancellor Scholz – a turning point indeed…
The 40 constituents of the DAX® Index will mirror how the German economy rides out the storm
The iShares MSCI Eurozone ETF
DAX-40 member Hannover Rück
