German trade surplus soars as euro slumps against the dollar

10th May 2010, Comments 0 comments

Germany's trade surplus leapt higher in March, official data showed on Monday, with the euro's fall in value against other major currencies helping crucial exports rack up solid gains.

The trade surplus for Europe's biggest economy jumped to 17.2 billion euros (22.2 billion dollars), from 12.7 billion in February according to figures released by the national statistics office.

The result was also much larger than expected, topping an average analyst forecast of 14 billion euros compiled by Dow Jones Newswires.

German exports were largely responsible for the gain, posting an increase of 23.3 percent in March compared with the same month a year earlier, while imports were 18.3 percent higher.

According to figures provided by the German central bank, the country's current account of the balance of payments -- a broad measure of trade with other countries -- showed a surplus of 18 billion euros in March.

That was also well above a forecast of 12.5 billion euros, and the March 2009 figure of 12.3 billion.

Germany lost its title of leading global exporter to China last year but is getting a boost now from the euro's fall in value against other major currencies as a result of the Greek debt crisis.

On Monday, Europe's single currency traded for 1.29 dollars after bouncing back from 1.2523 -- its lowest level since March 2009 -- following the announcement of a massive eurozone rescue package worth more than 750 billion euros.

A top German economist said Sunday the euro could weaken to parity with the US dollar, "as long as uncertainty over Greece and other countries on the periphery of the euro area continues."

Thomas Mayer, chief economist at Deutsche Bank, told the Bild am Sonntag weekly: "I think we could soon see 1.20 against the dollar and a further decline in the direction of parity is definitely possible."

That would cause energy prices in the eurozone to spike however, and probably set inflation back on a sharply steeper upwards curve.

On a monthly basis meanwhile, German exports gained a seasonally corrected 10.7 percent in March, while imports were up by 11.0 percent, the Destatis data showed.

Exports have helped the German economy emerge from its worst recession since World War II, and the economy ministry said Friday that industrial output shot up by four percent in March, a day after unveiling a spike in industrial orders.

"In light of the robust upturn in domestic and foreign demand for industrial output, it should continue in the coming months," a ministry statement said.

© 2010 AFP

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