Why are German exports benefiting less from global growth than they used to?

Leonard Salzmann and Philipp Schulz

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: The relationship between global economic growth and German goods exports has weakened substantially since 2010. Using rolling regressions, we show that the elasticity of German exports with respect to global GDP declined from 1.4 in 2010 to 0.4 in 2024. The weakening is particularly pronounced vis-a-vis China, where export elasticity fell from 1.3 to -0.2, while exports to the United States remained comparatively resilient. To explain this decline, we estimate a structural export model incorporating both price and non-price competitiveness indicators. The results suggest that deteriorating competitiveness has materially weakened Germany’s export responsiveness to global demand. In particular, rising relative labor costs and increasing similarity between German exports and those of competing economies are associated with significantly lower export elasticities. By contrast, relative export prices and labor shortages do not exhibit robust explanatory power.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:341913

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