Booming German trade suggests roaring second quarter

9th August 2010, Comments 0 comments

Germany reported soaring trade figures on Monday, suggesting that second-quarter growth in Europe's powerhouse economy could be the strongest since reunification 20 years ago.

Germany, the world's second-biggest exporter after China, said that provisional figures exports rocketing 28.5 percent to 86.5 billion euros (115 billion dollars) in June, the highest level since October 2008.

Imports soared 31.7 percent to hit a new record of 72.4 billion euros meanwhile, an all-time peak since statistics were first compiled in 1950, the Destatis statistics office added.

"This has improved chances of the German economy having grown more rapidly in the second quarter than previously assumed," Commerzbank analyst Simon Junker said.

"The German economy is bound to see its strongest quarterly growth rate since reunification" in October 1990, ING senior economist Carsten Brzeski added.

The overall German trade surplus surged by 44 percent from May to 14.1 billion euros, in line with an average analyst forecast compiled by Dow Jones Newswires.

For the first half of 2010, the trade surplus recorded by Europe's biggest economy gained 26 percent from the same period a year earlier to 74.6 billion euros.

The first six months of 2009 were marked by the country's worst post-war recession, however.

"We're seeing Germany doing better than the others right now but to some extent this is also because it did worse than the others in 2009," Deutsche Bank senior European economist Gilles Moec told AFP.

Since then, the value of goods sold has picked up markedly, in particular to Asia which has ordered impressive amounts of German machine tools, automobiles and chemicals.

Germany's current account of the balance of payments, a broader measure of all current payments into and out of the country, surged in June to 12.9 billion euros, from 1.8 billion the previous month, provisional figures from the central bank showed.

Berlin has been criticised by France and some others in Europe for not boosting consumption and relying unduly on exports, but Moec pointed out that household savings rates in Germany were lower than in France, Italy or Spain.

"This debate really needs to stop," he said.

Chancellor Angela Merkel has also been dubbed "Madame Non" by some circles for her perceived reluctance to launch a stimulus package for Germany and coming to the aid of Greece.

But "Germany is the only European country which is actually adding to the stimulus in 2010," Moec said.

Its diversified industrial supplier base also means exports often have parts made by companies in central or eastern Europe, and also in Spain, he added.

"If Germany does well, this seems to have a very nice second-round effect on Spanish exports," the French economist noted.

As for the overall economy, "the current export dynamics are not a new status quo," ING's Brzeski noted. "They will eventually slow down."

But German manufacturers still have some well-padded order books and the industrial sector's contribution to second-quarter growth will probably be substantial.

It "can really reap all the benefits of the rebound" worldwide, Moec added.

© 2010 AFP

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