Emerging Markets Key For German Export Growth
My colleagues in the Global Strategy team at Business Monitor ran this chart last week, highlighting the sharp differential between German export growth to emerging markets and the developed world. Between 1999 and 2008 the proportion of German exports to emerging markets rose almost 10pps to 29.5% (according to IMF data). Over the same period, the percentage headed to the Eurozone fell 4pps to 42.6% – a particularly stark contrast considering that during this time, the eurozone expanded to include Greece, Malta, Cyprus and Slovenia.
Germany - Exports By Destination, % of Total
With Germany being the world’s single largest trading economy, their export dynamics are a useful indicator for wider global structural shifts. To be sure, the chart above reflects the steadily increasing size of emerging markets relative to global GDP over the past decade, while also highlighting the increased domestic demand being generated by key German EM trading partners such as Russia, Poland, Turkey and China.
Going forward, considering the growth outlooks for EM and developed states over the coming decade, there is every reason to expect the trend seen from 1999-2008 to continue going forward. Business Monitor forecasts Emerging Europe growth to average over 4.5% in the next 10 years, while eurozone growth is expected to lag at around 1.5%. By 2019, four of the top six largest economies in the world will be emerging markets compared to just one right now. As a result, for German exporters, tapping the EM growth story will continue to be crucial for their strategic outlooks.