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TRADE

Imports hit all-time high

German imports hit a record high level in November, slashing the national trade surplus as a global recovery drove up prices for oil and other commodities, official data showed on Friday.

Imports hit all-time high
Photo: DPA

Imports soared by an annualised 33.3 percent to €75.1 billion ($97.5 billion), while exports gained a slightly less impressive 21.7 percent to €88 billion, the national statistics office said.

“As regards imports, a higher value than in November 2010 has never been recorded since foreign trade statistics were first produced for the Federal Republic of Germany in 1950,” the Destatis office added. It referred to former West Germany, which was reunited with former East Germany in October 1990.

Destatis said German exports had reached their highest level since October 2008, just after the collapse of the US investment bank Lehman Brothers. But Germany’s trade surplus fell to €12.9 billion from €16 billion in November 2009, well below an average analyst forecast of €15 billion compiled by Dow Jones Newswires.

This week, oil prices reached two-year highs of more than $90 a barrel as global confidence increased after the US economy showed more signs of recovery.

On Wednesday, the International Energy Agency warned that rising oil prices were entering “a dangerous zone” that could imperil a fragile economic recovery in developed nations this year.

In the 11 months from January 2010 to November however, Germany posted a surplus of €141.2 billion, with its export-oriented industrial sector reaping handsome gains from the pick-up in global trade.

A breakdown of the data could help officials in Berlin deflect some of the criticism aimed at Germany by partners in the now 17-nation eurozone, namely that its strong recovery has come at their expense.

Germany is expected to post economic growth of 3.6 percent for 2010, the strongest pace since reunification, and many European Union politicians claim the result is partly the result of Germans shunning their neighbours’ goods.

Destatis figures showed however that in November, German imports from other eurozone countries increased by 29.7 percent on a 12-month basis, while exports were up by a more modest 17.9 percent.

The split with countries outside Europe was even more pronounced meanwhile, as imports leapt by 38.3 percent while exports gained 24.7 percent. But the leap in imports did not show up in German retail sales for November.

Destatis said they slipped by a provisional 1.9 percent from October, though for 2010 as a whole the statistics office forecast a gain of up to 2.7 percent.

“Retail sales data has yet to reflect the oft-announced boom in German consumption,” Commerbank analyst Ulrike Rondorf noted.

AFP/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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