Germany, industrial production on the road to recovery? - Exports expand in March, imports shrink
German exports rose more than expected in March as demand expanded in anticipation of U.S. tariffs. Growth in industrial production also beat expectations, potentially pointing to an improvement in the sluggish sector.
Exports rose 1.1% in March from the previous month, data from the federal statistics office showed. That beat the 1.0% increase forecast in a Reuters poll. Imports fell 1.4% on a calendar and seasonally adjusted basis from February.
Germany's trade balance showed a surplus of 21.1 billion euros in March, up from 18 billion euros in the previous month. Exports to EU countries rose by 3.1%, while exports to countries outside the bloc fell by 1.1%. The bulk of German exports went to the United States, up 2.4% compared with February, as purchases were boosted by looming tariffs.
The measures announced by the US will deal a major blow to German industry, as the country was Germany's largest trading partner in 2024, with goods exchanged between them worth 253 billion euros. Meanwhile, exports to China rose by 10.2% this month.
Industrial recovery?
German industrial production rose 3% in March from February, compared with analysts' expectations for a 0.8% increase. The less volatile quarterly comparison also showed that output was 1.4% higher in the first quarter of 2025 than in the fourth quarter of 2024.
"Therefore, it is not just an increase that comes from the usual volatility. After more than two years of recession, there is probably also a cyclical element here, which gives us some hope for the coming months," economists say.
German industrial orders expanded more than expected in March, marking a 3.6% increase compared with the previous month, the federal statistics office said, indicating a recovery in demand.
“The March result confirms that conditions in the German industry have at least stopped deteriorating. However, any stimulus from the previous tariffs is likely to fade soon and the sector will also continue to face weak competition and a structural decline in demand for vehicles,” added an industry expert.
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