Despite a challenging economy, Germans are continuing to indulge in their favorite pastime of travel, earning them the title of “world champions of travel.” According to senior Deutsche Bank economist Eric Heymann, Germans spent a record €96 billion ($104 billion) on travel services abroad in 2023, a 15% increase from pre-pandemic levels in 2019.
This increase in travel spending is particularly remarkable considering Germany’s economic struggles. The country’s growth forecast for 2024 has been slashed to just 0.2%, and it experienced a 0.3% economic contraction in the previous year. Factors such as troubles in the eurozone, a lack of skilled workers, high European interest rates, and the loss of Russian natural gas have contributed to Germany’s economic rut.
Despite these circumstances, Germans have managed to maintain their wanderlust. In fact, they have even increased their savings rate to 11.3% in 2023, indicating a desire to prioritize travel experiences. Private households in Germany spent a higher share of their disposable income on traveling abroad in recent years compared to previous years. This spending accounted for 2.9% in 2023, 2.7% in 2022, and 1.4% in 2021.
However, while Germans are eager to explore the world, travel receipts from the rest of the world have remained 9% below 2019 levels. This has resulted in a record trade deficit of €62 billion in travel services for Germany. Despite this imbalance, early data suggests that Germany’s spending on foreign travel will continue to rise in 2024. Wealthier households, which often allocate their rising incomes towards travel, are expected to offset any reductions in travel spending by other households.
The economist also highlights that every euro spent on travel services abroad cannot be spent domestically. This suggests that Germany’s strong desire to travel may impact the growth of domestic private consumption, which is expected to be less than 1% in real terms in 2024, despite rising real incomes.
In addition to Germany’s economic challenges, the country’s manufacturing sector is also struggling. The HCOB composite purchasing managers’ survey for February recorded a four-month low of 46.1, signaling contraction. This indicates that the manufacturing sector’s decline is dragging down the overall economic performance, with the services sector unable to compensate adequately.
Despite these gloomy economic indicators, Germans remain determined to embark on their travel adventures. With strong booking numbers for long-distance journeys at the beginning of this year, it is clear that the desire to explore the world remains unwavering among German travelers.
