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German exports rebound despite recession fears

German exports rebounded in August thanks to strong demand from the United States, official data showed Wednesday, but analysts warned that the outlook for Europe’s top economy remained gloomy.

Germany exported 133.1 billion euros’ ($132 billion) worth of goods in August, up 1.6 percent month-on-month, according to seasonally-adjusted figures from federal statistics agency Destatis. In July, exports had plunged by 2.1 percent.

The increase beat analyst expectations and was mainly driven by a 12-percent jump in US demand for “made in Germany” goods.

But shipments to fellow European Union countries fell, as the continent grapples with soaring inflation and skyrocketing energy prices in the wake of Russia’s war in Ukraine.

Higher global prices and a weaker euro pushed up the cost of German imports in August, which rose by 3.4 percent to 131.9 billion euros, narrowing the country’s trade surplus to 1.2 billion euros.

“The war in Ukraine has succeeded in delivering what nothing else had managed before: letting the notorious German trade surplus disappear,” said ING bank economist Carsten Brzeski.

“Unfortunately, it is not a ‘good’ disappearing of the trade surplus, driven by stronger domestic demand but rather a ‘bad’ disappearing, driven by high energy prices and structurally weaker exports.”

Germany’s economy, traditionally a driver of European growth, is expected to fall into recession and shrink by 0.4 percent in 2023, according to the country’s leading economic institutes.