Industrial exports fall due to collapse in Germany's industry

Regarding industrial production– Industrial production growth remained almost unchanged in November at 1.23% year-on-year. The breakdown of production by sector also shows no significant change compared to October. Only in the mining industry did the decline in production slow to 2.57% in November from 7.18% in October.

Regarding industrial sales – In November, industrial sales growth collapsed to its lowest level since February – 0.78%. This was mainly due to a 2.56% drop in foreign sales, while at the same time, domestic sales growth slowed to 3.96%.

Comment

The data contrasts sharply with the sharp decline in industrial sales and the stabilization of production growth. The decline in sales is caused by domestic market problems rooted in Germany, Bulgaria's largest trading partner. In November, industrial production in Germany fell to levels not seen since 2016, even raising concerns that Europe's strongest economy may have entered a recession. Add to this the fact that Bulgaria's main exports are industrial goods and raw materials used in car production, and the picture becomes clearer. A decline in industrial production in Germany leads to a decline in imports of industrial goods and, accordingly (since Germany is our largest trading partner), a decline in our exports in this category.

Whether we see a recovery in the coming months depends on whether production in Germany recovers. If it does not, the German economy will most likely enter a recession, which would certainly significantly harm the growth of many EU member states, including Bulgaria. Germany is a major export destination for many European countries, and accordingly any serious contraction in its imports will hit all the others as well.

Data source: NSI

Did you like it? Take a minute to support the EKIP on Patreon!