May 10, 2012, 09.06 AM | Source: Reuters
German exports and imports both leapt to record monthly levels in March, bolstering hopes that Europe's largest economy has escaped recession.
Wednesday's data confirmed booming sales of high-quality German products to non-European markets in Asia and elsewhere but economists said the jump in imports also provided crumbs of comfort to Germany's struggling peers in the euro zone.
Trade figures from France, the euro zone's second biggest economy, showed its exports to Germany and other northern European countries increasing in March even as its sales to the crisis-stricken Mediterranean region tumbled.
German exports rose a seasonally adjusted 0.9% and imports were up 1.2%, the Federal Statistics Office data showed. The seasonally adjusted value of exports rose to 91.8 billion euros in March and imports to 78.1 billion euros, both record levels.
The seasonally-adjusted trade surplus remained flat at 13.7 billion euros from a revised 13.7 billion in February, beating the consensus forecast for 13.5 billion.
Coming on the heels of strong German industrial output and orders for March on Tuesday, the trade data underscored the success of the world's second biggest exporter in tapping into fast-growing emerging markets as demand closer to home wilts.
Exports to non-EU countries jumped 11.2% in the first quarter but rose only 2.3% to the European Union, the data showed.
"The competitive German economy is profiting from the revival of global trade after a soft patch at the end of 2011. Today's figures support our forecast that the German economy has grown slightly at the start of the year," said Ulrich Rondorf, an analyst at Commerzbank.
This would enable Germany to avoid a technical recession - defined as two successive quarters of contraction - as its economy shrank by 0.2% in October-December 2011.
Germany's eight leading economic institutes have revised upwards their 2012 growth forecast to 0.9%. The government is sticking to its forecast of 0.7%.
Hope from imports
Commenting on Wednesday's trade figures, German industry group BDI said it now expected exports to rise more than 3% overall this year on an annual basis, identifying cars, food and electrical goods as important growth areas.
Car sales to China have been gaining traction and German luxury names account for nearly 80% of the premium car market there, figures from PricewaterhouseCoopers show.
The German data contained some good news for the wider euro zone, much of which is battling sky-high unemployment, crumbling demand and swollen budget deficits and stands in stark contract to Germany, where jobless levels are at two-decade lows.
German imports from the rest of the euro zone in the first quarter of 2012 were up 4.7% from the same period last year. This compares with an increase of 5.0^ for the whole EU and 4.3% from non-EU exporters.
"The rest of the euro zone is trying to export its way out of trouble. Germany is looking a bit like a locomotive and this could soften the impact of austerity (in the euro zone)," said Christian Schulz, senior economist at Berenberg Bank.
"Germany is rebalancing... It is losing competitiveness relative to southern euro zone countries, with wages rising and inflation tending a little higher. But at the global level Germany is still gaining competitiveness, helped by the weaker euro," he added.
Recent wage deals in Germany have far outstripped inflation, stoking hopes of increased consumption in a country long known for its frugal saving habits. This would help offset the fiscal consolidation underway in the more indebted EU nations.
Germany is certainly not immune to the euro zone's woes. Some 40% of all German exports still go to the 17-nation single currency area, and 60% to the wider 27-member European Union. France alone, Germany's biggest trade partner, accounts for nearly 10% of all German exports.
Wednesday's trade data from Paris showed French exports to Germany in March were worth 6.3 billion euros, up from 5.9 billion in February. The data also showed France's overall trade deficit narrowed in March, as expected, due to an easing of energy imports, though its manufacturing exports slowed.
France's struggle to remain competitive internationally was a major theme of its presidential election, won last Sunday by Socialist candidate Francois Hollande.