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German Exports Signal Strong Growth

Mon, 08/09/2010 - 11:29am
Manufacturing.net

BERLIN (AP) -- Germany's recovery is gaining pace as the country leads Europe out of this year's debt crisis turmoil, with exports rising in June to their highest level since late 2008.

Germany, the world's No. 2 exporter after China, exported goods and services worth euro86.5 billion ($115 billion) in June, up 3.8 percent from the previous month, the Federal Statistical Office said Monday.

That was a 29 percent increase compared with June 2009 and the highest level since October 2008, in the wake of the bankruptcy of investment bank Lehman Brothers which precipitated the global credit crunch.

Imports rose 1.9 percent on the month to euro72.4 billion -- a 31.7 percent increase on the year and the highest level reported since West Germany started compiling statistics in 1950.

The ongoing export growth is "a very encouraging sign," Economy Minister Rainer Bruederle said. "At the same time, the dynamic growth of imports shows that ... the process of economic recovery is gaining in width and solidity."

The German economy, Europe's biggest, has settled back into growth over the past year as an improving global economy, and strong demand from emerging economies such as China, has boosted its exports -- its traditional strength.

Second-quarter gross domestic product figures are due on Friday, and they "should be a cracker," said Carsten Brzeski, an economist at ING in Brussels.

Exports are the main driver, while "industrial production has shown an impressive performance and even private consumption seems to have stabilized," he added.

The June foreign trade figures were less spectacular than May's, when exports rose 7.9 percent on the month and imports surged 13.7 percent, but that followed declines in April.

Exports "will eventually slow down," Brzeski said. But strong demand, particularly from Asia, and a weaker euro this year mean that "German manufacturers are looking into a bright near-term future," he added.

Further improvements in manufacturing "should once again stabilize the labor market" at a time when many people already are returning to full-time work, he added.

The euro sank to a four-year low in early June on fears about the eurozone's debt crisis, making European exporters' goods more competitive abroad. The euro has since recovered, but remains well short of the levels it reached late last year.

Germany's foreign trade surplus rose to euro14.1 billion in June -- up from euro9.8 billion in May and euro12.3 billion a year earlier, the statistical office said.

June exports to other countries in the European Union were up 23.5 percent from a year earlier to euro52.6 billion, with euro35.7 billion of that going to Germany's partners in the 16-nation eurozone -- a 22 percent increase.

Exports to other countries were up an even stronger 37.3 percent to euro33.8 billion.

For the whole of the year's first half, German exports totaled euro458.4 billion -- an 18.2 percent rise compared with January-June 2009. Imports increased 16.8 percent to euro383.8 billion.

Germany's Chambers of Industry and Commerce forecast that exports will grow by at least 11 percent this year and another 8 percent in 2011, while imports should increase by about 10 percent in both years.

Despite the expected growth, Germany won't regain the crown of leading global exporter that it lost to China last year, said the group's chief economist, Axel Nitzschke.

China is on course to increase its lead, and also to overtake the Netherlands this year as the biggest exporter of goods to Germany, Nitzschke said.

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