Berlin:Germany is projected to encounter a significant trade deficit with the Asia-Pacific region, estimated to reach around €146 billion by the year 2026. This development is primarily attributed to a decrease in German exports to China, despite increasing sales to other markets within the region.

According to Iraqi News Agency, a report from Germany Trade & Invest (GTAI) reviewed by Reuters highlights that German exports to 29 major economies in the Asia-Pacific region are anticipated to decline by 3.2 percent this year, totaling €185.3 billion. In contrast, imports are expected to increase by 6.4 percent, reaching €330.9 billion.

The report outlines challenges faced by German exporters in China, which has historically been a crucial market for Germany. As Chinese companies bolster their domestic production of advanced technology, machinery, and electric vehicles, German exports have been adversely affected. China represents about half of Germany’s trade in goods with the Asia-Pacific region, thereby exerting a substantial influence on the overall trade balance.

Additionally, the report projects that German exports to the Asia-Pacific region, excluding China, will grow by 2.8 percent by 2026, with the trade deficit with the remaining region expected to decrease to less than €35 billion. Notably, German machinery exports to China have dropped by 18 percent in the first seven months of this year compared to the same period last year, with automotive exports seeing a 30 percent decline.

The report also sheds light on the changing landscape of the automotive industry in China, where sales of German cars have dwindled to nearly half of their previous peak, as Chinese companies increase their share of the electric vehicle market and control over battery supply chains.

Alternative markets are becoming increasingly significant, as highlighted by the report. India is emerging as a crucial partner for German exports and imports, with trade expanding over the past decade to include pharmaceutical products and machinery components alongside apparel. Meanwhile, Japan remains a stable market for German enterprises, despite a notable depreciation of the yen against the euro and dollar over the past six years, which has affected Japanese purchasing power.