Germany is the world’s fourth largest economy. It is also Europe’s largest economy, and any European economic recovery depends in large part on Germany’s trajectory. Germany is the third largest exporter in absolute terms in the G20, and is nearly as dependent on exports as Saudi Arabia and South Korea.
Given the enormous size of the German economy, the country must export vast amounts every year to maintain social and political stability. Prosperity for exporters depends on the appetites of their customers and, since 2008, their ability to rely on exports has been diminishing. While other major exporters have been struggling, Germany has actually increased its export levels. Germany has thus created a significant vulnerability for itself and will be the next country to face an export crisis. Given the country’s high dependence on exports, this crisis will likely be extreme and destabilizing, with negative implications for other European countries.