German exports plunge

German exports plunge
Photo: DPA
German exports plunged 20.7 percent in January - the biggest drop in 16 years - as demand for goods from the world's leading exporter continued to slide amid the global economic slump.

January imports fell 12.9 percent from a year earlier, the Federal Statistics Office said on Tuesday.

It was the fourth straight monthly decline and Commerzbank analyst Simon Juncker noted that “foreign trade is expected to have a sharp negative impact on growth again in the first quarter” of 2009.

Germany’s trade surplus was halved to €8.5 billion ($10.8 billion), compared with over €17 billion in January 2008, in line with analyst forecasts for a surplus of €8.4 billion.

Exports to other countries in the 27-nation European Union fell 18.7 percent over the year while goods shipped to countries outside the bloc were even worse hit, plunging 24.5 percent.

The heavily export-driven German economy is suffering its worst recession in six decades, with the government expecting output to shrink 2.25 percent this year.

“So far, there are no visible signs of a fast recovery: The economies in industrial countries remain weak and the current crisis in eastern Europe is a further strain,” Junker said.

A large amount of German trade is with countries in eastern Europe whose accounts have plunged into the red owing to heavy consumption of foreign goods.

The steep depreciation of their currencies against the euro combined with tighter credit from western European banks has lead to an economic crisis in what was formerly a region that contributed significantly to German growth.