June 7, 2013 / 10:34 AM / 6 years ago

Bundesbank puts dampener on German trade optimism

BERLIN/FRANKFURT (Reuters) - German trade activity rose sharply in April, but a cut in the Bundesbank’s growth forecast dampened hopes that Europe’s largest economy might be gaining momentum.

Cars for export stand in a parking area at a shipping terminal in the harbour of the German northern town of Bremerhaven, late October 8, 2012. REUTERS/Fabian Bimmer

Exports rose 1.9 percent and imports by 2.3 percent, Federal Statistics Office data showed on Friday, offering some encouragement to other euro zone states aiming to export their way out of the region’s crisis.

But Germany’s central bank said that, after a second-quarter surge, the economy could slow considerably, cutting its 2013 growth forecast by 0.1 percentage points to 0.3 percent and its estimate for 2014 growth to 1.5 percent from 1.9 percent.

The Bundesbank’s 2013 prediction brought it into line with the International Monetary Fund, which halved its forecast for Germany on Monday.

The cut was “due mainly to downward revisions with regard to the external environment”, the Bundesbank said, forecasting that exports could fall by 0.8 percent from last year.

Capital Economics economist Jennifer McKeown called the trade data encouraging but said a recent rise in the euro “doesn’t bode well for Germany given that it exports quite a lot to outside the currency area.”

Imports from the currency bloc rose a healthy 5.4 percent in April, the statistics data showed.

But the overall German picture on imports was still very weak due to a lack of investment, McKeown said, so “any hopes that Germany is about to provide a massive boost to peripheral (euro zone) countries are far too optimistic.”

Private consumption, supported by wage hikes, moderate inflation and low unemployment, was the driving force behind German growth in the first quarter. But the economy expanded only 0.1 percent, meaning it barely avoided recession after shrinking in late 2012.

Germany’s traditionally export-driven economy is relying on domestic demand to prop up growth as foreign trade looks likely to act a drag this year, given that much of the euro zone, where it sends 40 percent of its exports, is lingering in recession.


Friday’s healthy export figures contrasted with more downbeat recent data.

Industrial orders dropped 2.3 percent in April as demand for capital goods at home and abroad weakened, and a survey earlier this week showed new manufacturing export orders declined slightly for a third straight month in May.

The Bundesbank warned on Friday that German exporters’ sales markets would only expand by 1.25 percent this year, which it said was considerably lower than global trade growth.

German firms are looking to China and other non-European countries as alternative markets to boost their sales, and unadjusted trade data showed exports to the euro zone rose by 4.3 percent in April and by 13.6 percent to countries outside Europe.

Continental AG (CONG.DE) has said improving markets in North America should help lift first-half sales to match year-ago levels and BASF (BASFn.DE) announced it would go on a hiring spree in the Asia Pacific region as it aims to double sales to customers there by 2020.

Friday’s import and export numbers were both well above forecasts.

The seasonally-adjusted trade surplus widened slightly to 17.7 billion euros from 17.6 billion in March. The consensus forecast was for it to narrow to 17.2 billion euros.

Recent data has painted a mixed picture of the German economy. Sentiment surveys have improved and the private sector has expanded slightly but orders have slumped, unemployment has edged up and retail sales have fallen.

Additional reporting by Sarah Marsh, Christine Amann and Stephen Brown; Editing by John Stonestreet

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