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Economy in Brief

German Trade Picture Produces a Higher Surplus on Weak Imports
by Robert Brusca April 9, 2008

The German trade picture shows a month-to-month slowing imports and flat exports. The slowdown in both the flows may be just monthly volatility or something more ominous. So far Europeans have remained up beat on their economic outlook even as the US economy has slipped. The OECD has held its forecast for 2008 growth for Germany above 2% while the fresh IMF forecast du jour (in fact, of today) cuts German growth by just 0.1% from the IMF’s last guess in January, bringing it to a pace of 1.4%.

The growth rates for exports and imports may be a bit misleading in the table, due to recent volatility. As the chart shows, both exports and imports accelerated from a September low for imports and a November low for exports. Both series have since topped out and growth rates have declined. The trade surplus plunged in December from a high in November but has since begun to edge higher as the pace of both exports and imports has cooled.

In the recent three-month period German imports of capital goods have been surging while German capital goods exports have remained subdued. Capital goods have been the lifeblood of the German economy. Domestically, consumption has just not kicked up. Consumer goods imports are holding steady at around a 6% growth rate while exports of consumer goods have been 20% to 25% over the recent year to three months in terms of annualized rates of growth. For the moment German trade flows appear to be slowing.

German Trade Trends for Goods
  m/m% % Saar
  Feb-08 Jan-08 3M 6M 12M
Balance* €€ 16.37 €€ 16.10 €€ 16.09 €€ 17.48 €€ 16.83
All Exports 0.0% 3.6% 9.3% 6.6% 6.7%
Capital Goods  -- -0.3% -0.6% 3.0% 4.6%
Motor Vehicles  -- -0.3% 0.8% -1.0% 4.2%
Consumer Goods  -- 10.3% 23.7% 25.6% 18.5%
All Imports -0.4% 4.0% 41.9% 6.1% 5.1%
Capital Goods  -- 5.7% 11.4% 13.5% 7.1%
Motor Vehicles  -- 12.0% -6.3% 18.3% 6.0%
Consumer Goods  -- 3.5% 6.5% 4.7% 6.6%
*Bil.Euros; mo or period average; Shaded area trends lag one month
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