Posted By Global Banking and Finance Review
Posted on January 21, 2025
By Maria Martinez
BERLIN (Reuters) - About 80% of German businesses who trade overseas expect a further decline in sales this year, Germany's BGA trade association said on Tuesday, forecasting a 2.7% decline in turnover compared with 2024.
"The outlook for 2025 is bleak," said BGA president Dirk Jandura. "Small and medium enterprises have lost their trust in politics."
Another risk for the German economy is the tariffs promised by U.S. President Donald Trump, measures he says would boost U.S. manufacturing.
Jandura said Germany and the EU will have to wait to see what steps Trump takes. "I advise no panic, evaluate calmly and build up a reasonable, strong counterposition."
He added that Trump is a "pragmatic" person, who knows that if tariffs were to come, there would be losses of prosperity in the U.S. within a few months, because imports would become dramatically more expensive.
Germany will hold elections on Feb. 23, and how to revive anaemic growth in Europe's biggest economy is one of the main topics in the election campaign.
Jandura said German foreign trade was always "a reliable anchor" for the economy but now the slowdown in the sector will take its toll in the labour market. According to the survey, 30% of the companies are planning job cuts.
Orders are dropping, investment is declining and insolvencies are increasing, he said.
According to the BGA survey, 36% of the companies in the sector invested less in 2024 than in the previous year.
"Without a turnaround in economic policy, without a clear policy change from Feb. 23, we will no longer be able to shoulder these challenges for long," Jandura said.
He called for investment in infrastructure, business-friendly conditions, cuts in red tape, and lower energy and labour costs.
PESSIMISTIC WHOLESALE TRADERS
Two-thirds of wholesalers recorded declining sales in the second half of 2024, and for 2025 40% expect a further decline in sales, according to a BGA survey.
The exporters' association forecasts stagnation in 2025 in wholesale trade in real terms and a 0.5% decline year-on-year in nominal terms.
"The economic engine of foreign trade is not just stuttering anymore, it has noticeably failed," Jandura said. "We are stuck in the tunnel, but without light."
(Reporting by Maria Martinez; Editing by Miranda Murray, Matthias Williams and Ros Russell)
