Politically uncertain times are a bad omen for the export-dependent German economy and a study recommends that companies adapt their strategy.
According to the Prognos Institute, an economic research and consulting firm, the German export industry should prepare itself for a permanent weakening of globalization.
A revitalization of multilateral global cooperation in economic policy is unlikely, write the foreign trade experts at the consultancy firm.
"Europe and especially Germany have benefited from globalization and the prevailing economic order for decades. At the moment, however, it looks as if the signs for cross-border cooperation point to stagnation at best," the firm wrote in a statement announcing the study.
A partial reversal of economic globalization is a realistic scenario, the experts stated.
The risks and potential consequential damage for companies and economies in Europe are enormous, especially for Germany. The institute estimates that around a third of German value added is currently exported.
In view of growing geopolitical tensions, the authors point out that although the rest of the European Union is the most important sales market, dependence on China for individual products such as laptops is very high.
The study commissioned by the Bavarian Industry Association (vbw) cites the decline in exports to Russia since the attack on Ukraine in 2022 as a warning example.
However, Prognos estimates that a complete decoupling of the German economy from China and other potentially risky locations in the short term would lead to the loss of a large proportion of current sales and procurement markets.
