Recovery seen as German exports pick up

10th August 2009, Comments 0 comments

The trade surplus soared 28 percent in June compared to May, raising hopes of a tentative recovery in the main motor of Germany's strongly export-oriented economy.

Berlin -- Germany, Europe's biggest economy, showed signs of spluttering back to life on Friday with new data showing a soaring trade surplus and the government issuing an upbeat forecast for industry.

The trade surplus soared 28 percent in June compared to May, the Federal Statistics Office said, raising hopes of a tentative recovery in the main motor of Germany's strongly export-oriented economy.

"Today's figure indicates that the German export champion managed a tremendous comeback recently," said Andreas Rees, the head German economist at the research arm of Italian banking giant Unicredit.

Exports enjoyed a seven percent rise in June compared to the previous month -- the highest rise for nearly three years -- while imports were up 6.8 percent, seasonally-adjusted figures from the FSO showed.

The total trade surplus, of 12.2 billion euros (17 billion dollars), surprised analysts surveyed earlier by Dow Jones Newswires, who had been expecting 10.7 billion euros.

The surplus from January to June this year was however still 44.8 percent down on the same period in 2008, showing that Germany still has a way to go to climb out of its deepest recession in six decades.

On a 12-month comparison, the trade surplus in June was down 22.3 percent.

There was also more sobering data from the economy ministry on Germany's industrial output on Friday, which actually fell 0.1 percent in June from May after a surprisingly strong jump of 4.3 percent from April to May.

But the ministry pointed out that industrial orders had jumped 4.5 percent in June after a 4.4-percent rise in May, saying: "Due to the recently rising industrial orders, the worst should be over for German industry.

German economic data has picked up in recent weeks and business and consumer confidence surveys are also pointing to brighter times ahead.

"Definitely more is in the pipeline in the months to come as indicated by surging foreign new orders," Rees said.

The government has so far stuck to its gloomy projection of an economy shrinking by a record 6.0 percent this year, before creeping back into the black in 2010 with a meagre 0.5 percent growth.

But with the German economy so heavily dependent on exports -- estimates say around 40 percent of output relies on foreign markets -- Friday's data will cheer Chancellor Angela Merkel, who is gearing up for elections on September 27.

The recovery in German trade is also a positive signal that the world economy is gradually recovering from its worst slump in decades.

European Central Bank President Jean-Claude Trichet told RTL radio on Friday that he believed the world economy was "coming out of the period of free fall."

Nevertheless, he warned: "The zone of uncertainty in which we have been since the crisis intensified in mid-September 2008 is not yet behind us."

AFP/Expatica

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