2023-06-07 08:26:10
Weak global demand has caused China’s exports to collapse. German industry is also feeling the effects of the ongoing economic downturn. Meanwhile, the OECD expects the global economy to recover slowly.
World export champion China felt the slowdown in global growth in May. Exports from the People’s Republic fell by 7.5 percent compared to the previous year, the customs authority announced today. Imports to China also shrank by 4.5 percent more slowly than forecast. Apparently, China’s economy is not gaining momentum despite the lifting of the strict corona restrictions in December last year.
The global economic slowdown and weakening domestic demand are further slowing down the expected post-pandemic recovery. While China’s export machinery is running much more slowly, the prospects for growth in the second largest economy, which actually started the year well, are also deteriorating. Most recently, important leading economic indicators had already turned out worse than expected.
OECD expects 2.7 percent growth
Overall, however, the global economy is likely to grow once more in the current year following years of rather weak growth. The industrialized nations organization OECD sees the global economy on a slow recovery course and, in its new economic outlook for 2023, expects global growth of 2.7 percent, which according to the forecast should accelerate slightly to 2.9 percent in 2024.
According to the OECD, however, there is still a long way to go towards strong and sustainable growth, because global growth will still be well below the average of the ten years before the corona pandemic. The bottom seems to have been passed, however, because energy prices and overall inflation are falling and supply bottlenecks are easing. According to the Organization for Economic Cooperation and Development, the financial situation of private households is also relatively solid.
Industry expands production only slightly
According to the OECD forecast, the economy in Germany is likely to stagnate this year and only grow once more by 1.3 percent in 2024. High inflation is reducing income and savings, which is dampening private consumption. So far there has been no decisive impetus for the recovery of the German economy: German industry increased its production only slightly at the beginning of the second quarter and fell short of expectations.
Total production rose by 0.3 percent in April compared to the previous month, as the Federal Statistical Office announced today. Industrial production fell by 2.1 percent in March. “Production is likely to be disappointing in the coming months as well. Because more and more of the orders left behind during Corona are being processed. In addition, the trend in incoming orders and the mood indicators are pointing downwards,” judged Jörg Krämer, chief economist at Commerzbank.
“Forecasts still too optimistic”
Alexander Krüger, chief economist at Hauck Aufhäuser Lampe, also considers the increase in industrial production to be just a “drop in the ocean”. In view of this, the private bank from Frankfurt am Main lowered its growth forecast for 2023 to minus 0.3 percent.
Jörg Krämer also believes that the German economy is likely to shrink in view of the current economic data: “The forecasts of many economists are still too optimistic.”
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