Germany's export expectations reach 4-year high in August, Ifo says

By Maria Martinez and Rene Wagner

BERLIN, Aug 26 (Reuters) - Sentiment in the German export industry has improved sharply, reaching its highest level since February 2022, the Ifo Institute said on Wednesday, helped by government-backed investment and increased use of artificial intelligence.

Based on a survey of manufacturers, Ifo's gauge of export expectations rose to 9.6 points in August from minus 2.8 points in July. 

"After years of economic weakness, it is good to see confidence returning and incoming orders picking up again in parts of industry," said Dirk Jandura, president of the BGA trade association.

BGA forecasts that exports will increase by 0.6% in 2026 compared with the previous year.

"The export industry is picking up speed," said Ifo's Klaus Wohlrabe. "Exports particularly to the European Union are booming, while exports to China continue to be sluggish."

Data released by the statistics office on Tuesday showed Germany's economy grew faster than initially indicated in the second quarter thanks to a 2.0% increase in exports.

Despite the positive data and better sentiment, Jandura said it was too soon to declare a turnaround for Europe's largest economy, as the question of whether the improvement develops into a sustained increase in private investment and export momentum remains open.

"Some of the better figures are attributable to large orders and government-backed investment, while a further boost is coming from future-oriented fields such as digitalisation and artificial intelligence," Jandura said.

Manufacturers of electrical equipment continue to be very optimistic, as do manufacturers of data processing equipment and electronic and optical products, reflecting the growing digitalisation of the economy and high investment in AI, the Ifo survey showed.  

The automotive industry and manufacturers of metal products are also far more optimistic about their export prospects, Ifo said.

By contrast, the paper industry and companies in metal production and processing expect exports to decline, according to the survey.

(Reporting by Rene Wagner and Maria MartinezEditing by Ludwig Burger and Gareth Jones)