German export companies are hardly expecting growth this year. "We have to write off the current year 2019 and be content with a black zero in the export," said the president of the foreign trade association BGA, Holger Bingmann. Maximum is still to be expected with a mini-growth of 0.5 percent. This summer, the BGA had forecast export growth of 1.5 percent.
The "consistent, constant foul play of the US administration under President [Donald] Trump" influenced particularly the internationally oriented German economy, said Bingmann. In addition, the hiccups about the upcoming EU exit from the UK make long-term planning impossible for companies - exporters expect Brexit to cost billions. Bingmann said that the bottom line is that the industry can not be satisfied with the current year.
Most recently, the German economy experienced nine years of recovery and achieved record exports for five consecutive years. The pace had slowed down considerably in the past year. For 2020, Bingmann did not want to risk a forecast. An improvement is to be expected at the earliest in the second half of 2020, he said.
Companies fear escalation between US and EU
Companies fear that the US trade dispute will continue to escalate as the EU imposes punitive tariffs following WTO approval. As a rule, a country that demands customs duties is a pity, Bingmann said. "In the end, the consumer pays the bill." At the same time, free access to world markets is becoming less and less obvious to German companies.
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As worried as in the US, the exporters look to China. Although exports to both countries rose by 4.3 percent in the first half of the year, this is far from the double-digit growth rates of recent years. In China, the strong oversight of foreign companies and a "suction of know-how" worries, said Bingmann.
BGA hopes for Mercosur trade agreement
Against this background, the exporting companies particularly emphasized the controversial free trade agreement between the EU and the South American Confederation of Mercosur. Especially small and medium-sized enterprises could benefit from opening up these hitherto quite isolated markets, said Bingmann.
The EU and the Mercosur states of Brazil, Argentina, Paraguay and Uruguay reached a political agreement this summer on building the largest free trade area in the world. The deal, however, is criticized by environmentalists. They fear that European farmers will be forced into a merciless price war and at the same time the rainforest destruction in South America will be fueled. For this reason, France and Ireland, among others, are currently refusing ratification. (Read more about the possible consequences of the agreement here.)
"Without the Association Agreement, not a single tree will be cleared," Bingmann said. In addition, climate protection and free trade should not be played off against each other. "Free trade is ultimately based on our prosperity, which is necessary to rebuild the economy in a climate-friendly way."