Germany and EU are losing their grip on trade dynamics

Not during the time of the Great Fuhrer! Then it was “Autarky” meaning self-sufficiency with two prongs: limiting imports of consumer goods and exporting manufactured goods that resulted in huge trade surplus. Today Germany and EU are both losing their grip on both intra-trade and extra-trade. More follows:

Facts & Analysis

The sad fact is EU trade as percentage of GDP is higher than the four biggies globally. Whereas EU clocks 90% on average, India with her teeming population has a lesser Trade-GDP ratio at 46%. Russia & China are in 32% while the world’s largest trader USA has the lowest Trade-GDP at 25%. Interestingly, both exports and imports are almost even at 50%. Imports sometimes peaked say at 55% in 2022 and bottomed out at 40% in 2010.

Let me dig further into these figures.  In trade statistics we have two departments: Intra -trade that is trade taking place in both goods & services within the boundary of the Union whereas Extra-trade is, what taking place outside the borders of the Union. Intra EU trade in goods amount to 40% of GDP while services account for 16% of GDP. The Extra trade in goods amount to 17%, while in services this is marked as 27% of GDP.

Further analysis indicate the percentage of GDP derived from exports of goods & services across the member countries of the Union vary drastically. For example, the number one rank in GDP prowess goes to Luxemburg with more than 190% while Italy is in the dog house with the lowest position at 32.2%. Germany considered to be the giant is placed at 19^th position with not so salutary figure of 40.3% in GDP profile.

Synthesis

1. Germany is just a paper tiger. She cannot hold candle to her erstwhile position under the Fuhrer who ruled with iron fist. Then Deutschland was treated in Europe and elsewhere in awe

2. Napoleon once called the Brits as a nation of shopkeepers (une nation de boutiquiers). Because only trade and commerce gave them political status. Germany and EU are not far from the similar calling card.

3. In geoeconomics terms outside Union Germany cannot survive as a great power. By the same token, sans Germany the EU remains hamstrung.

Strategy Advice

1. Germany must distinguish her role as the power behind the throne of European Union. Put it the other way an European power

2. Secondly, and more importantly she must define her role as a world power. This requires thorough strategy analysis of the present geoeconomics and bring forward policies and strategies to work with BRIIC nations namely Brazil, Russia, India, Iran and China.

Navigating strategy amid geoeconomics is the only way Germany can acquire her long desired concept of “Großdeutschland”.

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser