Huge Surge In German Exports--At Least One Country Is Growing

The economy of one Western nation is growing rapidly–Germany’s. The Federal Statistics Bureau said that exports rose 28.5% in June compared with a year ago.

Germany exported commodities to the value of EUR 86.5 billion and imported commodities worth EUR 72.4 billion in June 2010. Hence, German exports increased by 28.5% and imports by 31.7% versus a year earlier, the government agency said. Exports were up 3.8% from May.

The agency did not explain the data, but it is likely to be the effect of several things that make the German economy different from others in Europe and those of the US and Japan.Germany has the natural advantage of the euro, which has been a burden recently because of the capital it has needed to put into rescue packages for the Eurozone. But, the common currency makes the region a natural market for German manufactured goods and high-end services. The EU economy has recovered more quickly than expected, at least according to the ECB.

Germany also had an economy dominated by the production of high-end goods including cars and pharmaceuticals and a large services sector which includes software–a “product” that very few economies other than the US export. “Unlike the U.S.,  Germany’s manufacturing prowess was not eroded during the recession. Germany government policy kept may of its industrial employees on salary even though most were pressed to work fewer hours. A rebound in the demanded for manufactured goods did not require that nation to re-mobilized its work force.

Germany may end up being the one mature economy in the world that can stand as an example to the others. It has encouraged the growth and development of companies with high margins due to its industrial policies and it if has maintained employment through policies which have prevented mass layoffs.

Douglas A. McIntyre