German surplus widens, France set for record trade gap

Mon Jan 9, 2012 7:56am EST
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By Sarah Marsh

BERLIN (Reuters) - German exports bounced back in November boosting the country's trade surplus, a sign that Europe's largest economy may avoid a sharp slowdown in contrast to France which is expected to have run up a record trade deficit in 2011.

The leaders of the two countries met on Monday to find ways to create faster growth and help the euro zone out of its debt crisis.

The German economy has shown resilience but France is struggling to stay competitive, a problem for President Nicolas Sarkozy ahead of an April election.

New data from China, one of the largest importers of German goods, showed banks ratcheted up lending in December, reinforcing perceptions that the central bank is gently easing policy to cushion for slower growth abroad.

"Looking ahead, external demand from outside the euro zone, with the U.S. and Asia providing some positive news recently, and solid domestic demand have made the German economy the last stronghold of a rapidly weakening euro zone," said ING economist Carsten Brzeski.

German exports rose 2.5 percent in November after posting their biggest fall in half a year the previous month, official data showed, easily beating the 0.7 percent forecast. The surplus widened to 15.1 billion euros.

France's trade deficit narrowed sharply to 4.4 billion euros in November helped by Airbus exports. It is still heading for a record in 2011, however, highlighting the decline of French competitiveness compared to its German neighbors.

"Looking ahead, we do not expect the trade deficit to improve significantly," Barclays Capital wrote of the France's trade balance.   Continued...