Berlin: Germany's trade surplus narrowed in October to its lowest level in over half a year as exports posted meagre growth in the face of weakening demand from the country's recession-hit European partners. The figures added to evidence that Europe's largest economy will contract in the fourth quarter of the year amid a slowdown in foreign sales, long a driver of German growth.
Imports rose 2.5 per cent in October, far stronger than a 0.3 per cent increase in exports that followed a 2.4 per cent decline in September, data from the Federal Statistics Office showed. "The outlook may now be slowly improving with positive signals for Chinese and American growth, but the eurozone recession is likely to continue to weigh on German exports," Christian Schulz of Berenberg Bank said in a research note. "A falling trade surplus may also weaken GDP growth in th fourth quarter further."
Three-year euro crisis
Germany has been an engine of growth throughout the three-year euro crisis, but weakness elsewhere in the European Union (EU), where it sells roughly 60 per cent of its exported goods, is starting to bite. Last week, Germany's central bank slashed its growth outlook for next year, forecasting a meagre expansion of 0.4 per cent compared to 1.6 per cent previously. The downbeat mood was echoed on Monday in the eurozone's second largest economy.
The Bank of France said it expected GDP to dip 0.1 per cent in the final quarter from the third, while industrial output unexpectedly shrank in October. For Germany too many economists expect an economic contraction in the October-December period, and some see the country entering a technical recession in early 2013 with a second consecutive quarter of falling gross domestic product (GDP).
"Given the difficult economic situation in some euro-area countries and widespread uncertainty, economic growth will be lower than previously assumed," the Bundesbank said in a statement on Friday. It made clear however, that it did not expect a protracted slowdown.