Germany, one of the world’s largest exporters, is facing a global export crisis
- The fact that it has not yet experienced an overall annual export decline is not a comforting thought
- With Europe barely recovering from its economic stagnation and other markets similarly constrained,
- German exports should decline.
- The fact that they haven’t, and that German banks are troubled in spite of cash flow, indicates
- that significant price adjustments are being made that affect the profit margins on these exports.
- It appears that the problem of contracting exports is being postponed rather than solved.
- Germany’s high dependence on exports causes the German state, bankers, and corporations to want to avoid export decline for as long as possible.
- Since exports are over 45% of Germany’s GDP, a 5% drop would result in a decline in GDP of more than 2%, which would have a staggering impact.
Therefore, the Germans are postponing this decline for as long as possible
- However, delaying it compounds the problems in the long run,
- particularly for already weak German banks that may be forced to deal with delayed or restructured debt repayments.
- The Germans are facing a profound financial crisis that can be postponed, but not avoided.
- The world’s economy is stagnating, and exporters around the world are seeing declines.
- Germany has not so far.
- When it does, which is inevitable, the fourth-largest economy in the world will suddenly see:
--- massive export contractions,
--- declines in GDP, and
--- a significant financial crisis with global implications.