Global slump hits German trade: official data

Agence France-Presse

Posted at Feb 09 2009 07:06 PM | Updated as of Feb 10 2009 03:06 AM

FRANKFURT - Germany, a powerhouse in the world economy, said on Monday that its key export sector flagged in December when imports surged in a sign its recession may have deepened at the end of last year.

"The export data seamlessly fit into the series of recent ugly industrial figures," commented UniCredit Group analyst Alexander Koch.

An export slowdown is especially bad news for Germany because exports are its main engine of growth, and the data showed that they were still losing steam at the end of the year.

With French economic activitiy set to contract in early 2009 amid a record French trade deficit, the eurozone's two biggest economies are both struggling to cope with the global economic downturn.

Germany said its 2008 trade surplus fell sharply, amid weak global demand for automobiles and machine tools.

The surplus usually posted by Germany, the biggest European economy, shed 8.7 percent from the level in 2007 to 178.2 billion euros ($226.8 billion).

Analysts said that trade would thus weigh again on overall economic output, estimating that the German economy, the biggest in Europe, could contract by another 2.0 percent in the fourth quarter of 2008, worsening an already deep recession.

Total exports increased by 2.8 percent, while imports gained 5.8 percent, the Destatis statistics service said.

Last week, data showed that industrial output suffered its biggest decline in December since records for a reunited Germany began in 1991, prompting UBS economist Martin Lueck to declare the sector was gripped by an "ice age."

Industrial orders fell in December by more than double the amount expected meanwhile, and plunged by 25.1 percent for the year as a whole, pointing to continued weak output in the months to come.

The trade surplus in December came to 6.9 billion euros, down from 9.9 billion in December 2007, Destatis said.

That was well below expectations for a surplus of 8.4 billion euros forecast in a poll of economists by Dow Jones Newswires.

"There is no recovery to expect in the months ahead," Commerbank analyst Ralph Solveen warned. "There are currently no signs of an early recovery of foreign demand."

Destatis said exports fell by 7.7 percent in December on a 12-month basis, and by 3.7 percent from the previous month.

The one-month drop came on the heels of a 10.8 percent collapse in November.

A key German export, automobiles, has been slammed by a slump in global markets, but sales of machine tools and other capital goods used to make finished products have fallen as well.

Germany has been hit "harder than most other important export countries," Koch said.

Figures provided by the German central bank showed that Germany's current account, the broadest measure of trade with other countries, posted a surplus of 162.5 billion euros last year, down from 180.8 billion in 2007.

And while the value of German merchandise exports in dollar terms exceeded that of Chinese companies for 2008 as a whole, Germany's "sixth annual title in a row" would likely be its last, Koch said.

"On a monthly basis, China eventually has wrested the throne at the end of 2008," he estimated.

Trade fell worldwide in 2008, with businesses from Chinese toy makers to French champaign producers reporting sharply lower sales.

Government packages aimed at boosting recession-hit economies have been scrutinized for signs they could foster protectionism, which economists say contributed to turning a 1930s recession into the Great Depression.

On Thursday, European Central Bank president Jean-Claude Trichet warned that protectionism in response to the global economic crisis was a "very, very important threat."