German exporters’ outlook worsens in March on Middle East conflict

German exporters' expectations deteriorated in March as the conflict in the Middle East added to uncertainty over external demand and energy costs, according to data released Thursday by the ifo Institute.

The country's industrial export expectations index fell to minus 0.9 points in March from 2.7 points in February, reversing three consecutive monthly increases.

"The war in Iran has significantly increased uncertainty among exporters. Many companies fear a decline in demand in important sales markets," Klaus Wohlrabe, head of forecasts at ifo, said.

Wohlrabe added that export prospects in the coming months will depend largely on how the conflict in the Middle East evolves.

German exporters had already started the year weakly, with softer demand from China and Europe weighing on performance.

Sector data showed mixed trends. Stagnation persists in mechanical engineering as well as metal production and processing, while exports are expected to continue declining in the paper, printing and chemical industries. The chemical sector is under particular pressure due to the sharp rise in energy prices triggered by the war in Iran.

Despite the broader weakness, the automotive sector expects a "clear boost" in exports. Its expectations barometer, which is heavily oriented toward foreign markets, reached its highest level since June 2020, according to ifo.

Separate data from the Federal Statistical Office (Destatis) showed exports fell 2.3% month-on-month in January to €130.5 billion ($141.3 billion), the steepest decline since May 2024.