German GDP may decline in the fourth quarter. German exports were flat year on year in November, with sales to the euro zone down a hefty 5.7 per cent from the previous year. But the country's slowdown is likely to be temporary. Emerging markets will drive Germany on.
The 10.4-per-cent increase in exports outside the European Union in January to November compared with the previous year reflects what has been taking place for the past remarkable decade – and is a sign of things to come.
German exports have doubled since 1999. Some of that increase comes from the country's position as euro zone powerhouse. Exports inside the currency zone were 55 per cent higher in 2011 than in 2000, although they have stagnated since 2007. The euro zone crisis hurts Germany – but membership of the single currency helps by keeping the euro's value from soaring.
The United States has helped Germany less than Europe. German exports there were only 19 per cent higher in 2011 than 11 years earlier, held back by the big rise of the euro against the dollar over the period and by the U.S. recession.
Emerging economies explain why Germany has prospered even as its neighbours and the United States ailed. German sales to China rose at an average annual rate of 17.7 per cent from 1996 to 2011. Spectacular growth has also been achieved in sales to Brazil, Russia and India. The result was a fivefold increase in the value of exports to the BRIC nations between 2000 and 2011, to €121-billion ($159-billion). The four countries' share of German exports increased from 4 to 11 per cent, while the U.S. share dropped from 10 to 7 per cent. Germany's export fortunes now depend far more on the BRICs than on the United States.
The message is optimistic. Emerging markets are powering Europe's largest economy, helping it withstand the euro-zone currency crisis. Trade and the advance of emerging economies are reducing the world's reliance on the United States and Europe, and making it wealthier, more balanced and healthier. For all its angst, the old world is sharing the glow.