World’s greatest manufacturer sits next door to the Netherlands

Industrious neighbour an asset

WASHINGTON - Which of these three nations is the world's top exporter: China, Japan or the United States? The answer: none of the above. World trade's quiet achiever is Germany, which usually tops the export tables with its steady sales of large ticket goods such as industrial machinery, automobiles, chemicals, pharmaceuticals, advanced medical devices and information technology software and hardware. Much of Germany’ export moves through Rotterdam, benefiting the Dutch economy.

From high-speed trains for China to luxury limousines for North America and heavy construction equipment for resources projects in outback Australia, German names like Siemens, Schering, Hochtief, DaimlerChrysler, Porsche, BMW, Volkswagen, Bosch, Hella, SAP and Deutsche Bank are global leaders.

Last year, German merchandise exports jumped 21 percent to $912 billion, almost $100 billion more than the United States ($819 billion) and well ahead of China and Japan.

Because the United States is such a huge buyer of goods from other countries - its imports in 2004 reached $1,525 billion, compared with $717 billion for Germany of which a significant percentage passed through Rotterdam as well - the U.S. has the biggest total merchandise trade volume of $2,344 billion.

Ten percent

That puts it well clear of Germany's $1,629 billion, and third-placed China on $1,154 billion. And in commercial services trade, the U.S. is even more dominant, with total imports and exports of $578 billion last year, compared with $327 for Germany and $308 billion for third-placed Japan.

But Germany has the merchandising muscle, accounting for 10 percent of total world exports. About one in four German jobs depends on exports, and a third of German GDP is generated that way.

Germany’s most important trade partner is France, a fact reflected in new Chancellor Angela Merkel's decision that her first foreign visit would be to see French President Jacques Chirac.

Merkel has pledged to restore German economic growth, cut the budget deficit and generate more jobs, a tough challenge, given that most economists expect growth will be below 1 percent this year.

There are some signs however that Germany's sluggish performance of recent years is about to improve a bit, with the Gross Domestic Product (GDP) growth outlook for 2006 put at 1.3 percent by forecasters such as the Economist Intelligence Unit (EIU). But recent data shows that domestic demand remains weak, a proposed value-added tax could crimp it further, and the jobless rate still above 11.5 percent, the highest in the euro zone.

Second

In contrast, exports should rise up to 5 percent next year, according to the EIU. So it is exports that will continue to underpin Germany's economy and help that of the Netherlands as well.

Germany’s reputation remains undiminished as a maker of high quality equipment and machinery across a range of industry sectors. It is a global leader in biotechnology, information technology and chemicals as well. Even its services sector, including banking, insurance, transportation and tourism, while only half the size of the United States, is second largest in the world.

The main buyers of German goods and services after France and the United States include the UK, Belgium, Netherlands, Italy and Spain. Poland, Hungary and the Czech Republic are becoming important customers.

Germany's competitive export sector does well when there is an upsurge in world trade. With China, India and the U.S. driving much of the global expansion and signs of demand on the rise in Japan and the euro zone, the consensus outlook for 3.5 percent global economic growth in 2006 favours Germany. It also signals the likelihood that more tonnage will pass through Rotterdam.

WORLD'S TOP TRADERS

Total merchandise imports and exports, 2004
1. United States $2344.3 billion
2. Germany $1629.2 billion
3. China $1154.5 billion
4. Japan $1020.3 billion
5. France $914.2 billion
6. UK $810.4 billion
7. Italy $700.2 billion
8. Netherlands $677.5 billion
9. Canada $596.3 billion
24. India $172.8 billion
Source: WTO, October 2005

TOP SERVICES TRADERS

Total services imports and exports, 2004
1. United States $578.3 billion
2. Germany $326.9 billion
3. UK $307.9 billion
4. Japan $228.9 billion
5. France $205.9 billion
6. Italy $162.6 billion
7. Netherlands $145.4 billion
8. Spain $138.2 billion
9. China $133.7 billion
16. India $80.5 billion
Source: WTO, October 2005

The countries rank totally different when trade and services are calculated based on the country’s population. It each case, the Dutch lead the output of goods and services per person.