German exports "slow down" - China and the eurozone weaken demand, while the US brings a positive signal
Germany's export engine is losing steam. German exports fell in July for the first time in five months, raising questions about the strength of the recovery in Europe's largest economy.
According to preliminary data from the German statistics office, Destatis, exports fell by 0.8% compared to June, falling to 138.2 billion euros. The decline was bigger than analysts had predicted, who had expected a contraction of just 0.5%. The main blow came from European markets and China. Exports to China fell by 9.5%, while shipments to other eurozone countries decreased by 2.8%.
The figures come at a delicate moment for the German economy. Just days earlier, July industrial production data also came in weaker than expected, raising concerns that German industry may not yet be on the path to a sustained recovery.
But while China and Europe are curbing demand for German goods, trade with the United States is painting a very different picture. Exports to the United States, Germany's top destination for goods, rose by more than 19% in July. That's a significant recovery after the previous trade slump linked to U.S. tariffs.
However, the increase in shipments to the US market was not enough to offset the weakness in other major markets. At the same time, German imports fell by 5.7%, to 116.9 billion euros. As a result, the country's trade surplus widened to 21.3 billion euros.
At first glance, a larger surplus might seem like a positive development for the German economy. But falling imports and weakening exports could simultaneously indicate that economic activity and domestic demand are remaining under pressure.
Germany has gone through a difficult period for industry in recent years, hit by high energy costs, increased international competition and weakening demand for its industrial products, especially in traditional sectors such as automobiles, machinery and chemicals.
At the beginning of the year, however, the picture looked more optimistic. Economic indicators turned out to be stronger than expected, and several German research institutes recently upgraded their forecasts for economic growth in 2026, to around 1.2% to 1.4%.
New data on exports and industrial production threaten to dampen this optimism. For the German economy, the return of exports is particularly important, as the country relies heavily on industry and international trade. Weakening demand in China and the eurozone, two key markets for German companies, could limit the scope for a rapid recovery.
Meanwhile, strong growth in exports to the US offers a positive point, but also highlights the dependence of the German economy on developments in global markets. Markets will now focus on data in the coming months to understand whether the July decline was a temporary deviation or a sign of a broader slowdown. For Germany, the question is whether the economy is finally recovering from years of weakness, or whether its traditional export engine is losing steam again.
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