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German exports fall at fastest pace since December 2011
November 8, 2012 / 7:19 AM / 5 years ago

German exports fall at fastest pace since December 2011

BERLIN, Nov 8 - German exports slid at their fastest pace since late last year and imports also fell in September, adding to evidence that the euro zone crisis has begun to inflict a heavy toll on the currency bloc’s largest economy.

Workers assemble the new Porsche 911 sports car at the Porsche factory in Stuttgart-Zuffenhausen January 24, 2012. REUTERS/Michael Dalder

The trade figures come after a string of disappointing data from Europe’s economic powerhouse, where business sentiment has worsened, the private sector has contracted, joblessness has risen and industrial orders have fallen at their sharpest rate in a year.

“The debt crisis has arrived in Germany: At year-end 2012, weaker demand from abroad comes on top of uncertainty that has weighed on investments since the summer of 2011,” said Andreas Scheuerle at Dekabank.

Imports fell 1.6 percent and exports declined 2.5 percent, data from the Federal Statistics Office showed on Thursday, undercutting forecasts in a Reuters poll of economists for declines of 0.1 percent and 1.5 percent respectively.

The seasonally-adjusted trade surplus narrowed to 17.0 billion euros from 18.1 billion in August. The consensus forecast was for it to narrow to 16.8 billion euros.

For a long time Germany’s economy seemed impervious to the euro zone’s troubles, but it is now succumbing and many economists expect it to contract in the fourth quarter.

Exports had managed to hold up fairly well this year, and have fallen in only four out of nine months, as demand from Asia has compensated for a weaker appetite in European countries struggling with austerity measures.

But Thursday’s data suggests this will no longer suffice.

Germany’s export-oriented companies have bemoaned weakening demand from Europe during this earnings season, with tyre maker Continental (CONG.DE) saying it would have to scale back some production and steel maker Salzgitter (SZGG.DE) cutting its full-year outlook.

    Forecasts from the European Commission on Wednesday suggest next year will not be any rosier for demand for German exports. The euro zone economy will barely grow, it said.

    A breakdown of the trade data on an unadjusted basis showed exports to euro zone countries slumped 9.1 percent on the year in September, even as exports to countries outside Europe rose 1.8 percent.

    “This is bad news for German growth. There probably won’t be any impulse from foreign trade,” said Christian Schulz at Berenberg Bank. “That weakens gross domestic product. We are depending on domestic demand.”

    Yet the drop in imports, which undercut even the lowest forecast in the Reuters poll, also raises questions about the level of domestic demand, which many economists had expected would prop up growth during the euro zone crisis and a global economic slowdown.

    Germany’s government last month slashed its forecast for growth next year to 1.0 percent, and its panel of economic advisers this week even undercut that estimate, forecasting expansion of 0.8 percent.

    Additional Reporting by Rene Wagner, Annika Breidthardt and Madeline Chambers; Editing by Noah Barkin

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