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TRADE

Exports seen topping €1 trillion next year

German exports are tipped to reach a record high in 2011, with the country's main trade association forecasting sales abroad should crash through the €1 trillion barrier for the first time.

Exports seen topping €1 trillion next year
Photo: DPA

The Federation of German Wholesale, Foreign Trade and Services (BGA) is predicting that exports will rise by about seven percent next year.

BGA chief Anton Börner said that would represent a resumption of the steady climb typical of Europe’s biggest economy, after a slump in 2009 followed by a quick rebound in 2010.

The BGA expects exports will have grown by about 16 percent this year, reaching €937 billion, though the picture could be even rosier, with an 18 percent increasing reaching €953 billion.

The record year so far is 2008, when Germany exported €984 billion worth of goods. This figure could “with a rise in exports of seven percent be broken,” Börner said.

“The boom regions for German exports were China, Southeast Asia, Brazil and the Arabian peninsula, Börner said of 2010.

Machine tools, cars, chemicals and electronic equipment were the big sellers.

Official figures from the Federal Statistical Office show that in the third quarter of 2010, exports to Russia rose 42.4 percent and exports to China climbed 34.3 percent. Altogether, €100.5 billion worth of goods were exported to countries outside the European Union in the three months from July to September.

While exporters are looking east for growth, Germany’s EU partners remain collectively the biggest export destination. Some €144.5 billion worth of goods, or 59 percent of the total, were sent to other EU countries in the third quarter.

Börner said the global economy would “clearly slow down” in 2011, though “I don’t believe to the point of recession.”

He expected the Germany to grow by 1.5 percent to 1.75 percent – which is among the more conservative forecasts that have been made.

DPA/The Local/djw

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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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