Geopolitical problems impact on German exports

German exports posted their biggest fall in nearly a year, in March, and imports also dipped as the crisis in Ukraine and a slowdown in China weighed, narrowing the country’s trade surplus and confirming trade was a drag on growth at the start of 2014.

Figures from Germany’s Federal Statistics Office showed seasonally -adjusted exports slipped 1.8% on the month, their second consecutive fall, and imports dipped 0.9%, pushing the trade surplus down to €14.8bn, from €15.8bn in February. Economists had expected a March surplus of €16.6bn.

“As already reflected in other industrial data, March saw a stronger real economic impact from the Ukrainian crisis and the Chinese slowdown than confidence indicators had suggested,” said ING economist Carsten Brzeski.

“All in all, with ongoing geopolitical problems and the slowing emerging economies, it looks as if Germany’s famous export engine could still be sputtering for a while,” he added.

In the first two months of 2014, German exports to Russia dropped by 16%. Detailed data for March will not be available until later in the month.

The German government expects domestic demand to drive growth this year while foreign trade, which has traditionally propelled the country’s economy, is expected to be a drag.

A breakdown of unadjusted data showed German exports to the eurozone edging up 0.1% in March compared to the previous year and imports from the single currency bloc rose by 2.3%.

Exports to EU member states outside of the euro — such as Britain — rose 10.4%, however and imports rose 10.8%.

Germany’s current account balance surged in March to €19.5bn, from €13.8bn the previous month, a development which could provoke criticism of Germany for not doing more to stoke domestic demand.

“We are ending the first quarter on a weak note,” said economist Holger Sandte at Nordea.

First quarter GDP figures are due next week and are expected to show the German economy grew by 0.8% in the first quarter.

— Reuters