German exports shift from US to China

German exports in January rose 24.2 percent from a year earlier, pushing the country's trade surplus higher, while China overtook the Untied States as the leading importer of German goods, official figures showed Thursday.

German exports shift from US to China
Photo: DPA

Compared with December, however, exports fell 1.0 percent although analysts said the drop was likely to be temporary and noted a landmark shift in shipments to China.

“This setback at the start of the year is unlikely to change the fact that exports will remain the major driver of the German upswing this year,” Commerzbank analyst Ulrike Rondorf said.

Imports in January compared with December, meanwhile, were up 2.3 percent.

On an annual basis to January, German exports totalled €78.5 billion ($108.7 billion), with imports up 24.1 percent on the year to €68.4 billion, producing a trade surplus of €10.1 billion, up from €8.1 billion in January 2010, the Destatis statistics office said.

The trade surplus was below an average analyst forecast of €12 billion compiled by Dow Jones Newswires.

Analysts said the month-on-month decline in exports should not mark the start of a trend unless a freight train drivers strike becomes entrenched and a stronger euro weighs on the competitive position of German goods.

Meanwhile, “for the first time ever, German companies shipped more goods to China (including Hong Kong) than to the US,” UniCredit chief German economist Andreas Rees noted.

“According to our calculations, the export share to China including Hong Kong was 6.6 percent in December 2010 … compared to 6.5 percent to the US.”

He called the shift “a turning point in German economic history” but also noted that any cooling of the Chinese economy would quickly affect Germany as well.

Exports to the United States and especially other members of the 17-nation eurozone should help Germany continue to grow, however.

Some of Germany’s eurozone partners charge that its persistent trade surplus comes at their expense because the country does not consume enough of their goods, but the rise in imports this time was likely due to higher oil prices.

Figures provided by the German central bank showed the current account, a broader picture of trade in goods and services along with financial transfers, had a surplus of €7.2 billion in January.

One year earlier it stood at 5.6 billion euros.


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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.


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.