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Exporters shift back into top gear

The German export machine shifted back in top gear in September, official data showed on Monday, boosting further the country's hefty trade surplus despite the strong euro.

Exporters shift back into top gear
Photo: DPA

German sales abroad rose by 3.0 percent in the month to €84.3 billion ($118 billion), adjusted initial data from the statistics office Destatis showed.

At Goldman Sachs investment bank, Dirk Schumacher commented: “The data for external trade are volatile from month to month but the figures for September are in line (with the outlook) for strong continuing growth of exports.”

At ING bank, economist Carsten Brzeski said that despite action to hold down state budgets in other countries in the eurozone and the slowdown in world demand, products “made in Germany”‘ continued to sell very well.

This trend was not likely to slowdown soon, he said. Compared with the data for September last year, German exports have surged by 22.5 percent.

Last year Germany was overtaken as the biggest exporter in the world by China. So far this year it has exported goods worth €703.2 billion. In September, imports fell by 1.5 percent in the month to €68.7 billion.

Consequently the balance of trade for the month showed an increased surplus, taking the surplus so far this year to €114.0 billion, or an increase of 16.5 percent from the equivalent figure last year.

Meanwhile, the balance of payments on current account, the broad measure of all current payments into and out of the country including payments for trade, services and financial transfers, showed an increased surplus of €85.7 billion so far this year from €75.7 billion at the same time last year.

The trade surplus in Germany, the biggest economy in Europe, is an underlying strong point for the eurozone, but is also a matter of concern in that, together with the payments surplus, it demonstrates divergence of economic performance among eurozone countries and notably with France.

The German surplus has been rising since the end of last year on the back of recovery throughout the world economy. This activity has pushed the German economy ahead. The government is expecting gross domestic product to grow by 3.4 percent this year.

AFP/The Local/mry

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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