German exports fall more than forecast in May

GERMAN exports fell more than expected in May due to weak demand from China, the United States and European countries, data from the federal statistics office showed on Monday (Jul 8).

Exports fell by 3.6 per cent in May compared with the previous month, almost double the 1.9 per cent decrease forecast by analysts in a Reuters poll.

The foreign trade balance showed a surplus of 24.9 billion euros (S$43 billion) in May, following 22.2 billion euros in April and 16.8 billion euros in May of the previous year.

After two good months, the export sector has come back down to earth, said Hauck Aufhaeuser Lampe Privatbank chief economist Alexander Krueger.

Exports should generally benefit from the somewhat stronger global economy, he said. “However, there are signs of constant ups and downs in the coming months.”

Exports to EU countries dropped by 2.5 per cent in May on the month and exports to countries outside the EU declined by 4.9 per cent, the statistics office reported.

Germany’s exports to the US – its largest export market in May – dropped 2.9 per cent on the previous month, while those to China fell by 10.2 per cent and those to Russia declined 19.3 per cent.

“Exports are far from being a summer fairytale,” said Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce.

The upturn in the global economy is not reaching the German export industry, Treier said, noting that geopolitical uncertainties and trade barriers were slowing down exports.

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Imports fell by 6.6 per cent in May on the previous month, far outstripping the 1 per cent decrease forecast by analysts in a Reuters poll.

“The plunge in imports is a warning for our forecast that consumption is now rebounding, though the correlation between imports and consumers’ spending is far from perfect,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

He noted that the three-month-on-three-month indicator for imports and exports sank in May but said he expected that it would rebound in coming months.

“The trend in both imports and exports is better than implied by today’s data,” Vistesen said. REUTERS