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Thursday, October 9, 2008

German Exports Drop Sharply In August

Germany's trade surplus fell back in August as exports fell more sharply than imports, figures released on Thursday by the German federal statistics office showed. Germany posted a surplus of 10.6 billion euros, compared with 13.8 billion in July, and way down from 19.9 billion in June.

Month on month (with both calendar and seasonal adjustment), exports decreased by 0.5% and imports by 2.5% on July 2008.From a year earlier, exports declined 2.5 percent. Imports were up 2.6 percent from August 2007. The surplus in the current account narrowed to 7.3 billion euros from 11.9 billion euros.

Exporters are grappling with a slowdown in the economies of their main trading partners. Eurozone gross domestic product shrank 0.2 percent in the second quarter and is most probably set to shrink again in the third, making it quite likely that we will see the region's first recession since the euro was introduced in 1999. At the same time, the deepening financial market turmoil makes it likely that in the coming months the position will deteriorate even further.

Exports to EU member states dropped, since in August 2008, Germany dispatched goods to the value of EUR 47.2 billion to member states of the European Union, while it received commodities to the value of EUR 41.0 billion from those countries. Compared with August 2007, shipments to EU countries were down by 1.4% and arrivals from those countries increased by 1.1%. At the same time exports to the eurozone also fell, since goods to the value of EUR 30.0 billion (–1.3% y-o-y) were dispatched to the euro area countries in August 2008, while the value of imports from those countries was EUR 27.9 billion (–0.6% y-o-y). Goods to the value of EUR 17.2 billion (–1.6% y-o-y) were dispatched to EU countries not belonging to the euro area in August 2008, while the value of goods arriving from those countries was EUR 13.1 billion (+5.0% y-o-y).

And non-EU countries no longer acted as a support, since Germany exported goods to the value of EUR 28.5 billion to and imported goods to the value of EUR 24.1 billion from countries outside the European Union (third countries) in August 2008. Compared with August 2007, exports to third countries decreased by 4.4% while imports from those countries increased by 5.2%.

Since Germany is now totally dependent on exports for GDP growth this waning export performace more or less guarantees quite a substantial recession in Germany over the coming quarters.

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