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Exports remain strong with 2.7 percent rise

German exports picked up in February after a decline in January, official figures showed Friday, another sign of sustained economic activity in Europe's powerhouse.

Exports remain strong with 2.7 percent rise
Photo: DPA

Exports rose 2.7 percent from January to a calendar- and seasonally-adjusted €84 billion, the Destatis statistics office said, while imports were 3.7 percent higher at €71.9 billion.

The trade surplus slipped to €12.1 billion from €12.7 billion a year earlier.

Economists polled by Dow Jones Newswires had forecast a slightly higher surplus of €12.5 billion.

In January, German exports declined 1.0 percent while imports rose 3.7 percent, Destatis said, revising the import figure from an initial estimate of 2.3 percent for Europe’s biggest economy.

On a 12-month basis, exports rose 21 percent in February, while imports were 27 percent higher.

Germany’s current account surplus, a broader measure of trade in goods and services, fell to €8.9 billion in February on an unadjusted basis from €10.2 billion a year earlier, Destatis said.

That was well below an analyst forecast of €12 billion.

Commerzbank economist Ulrike Rondorf noted that demand for German products

was still high and added: “The export boom should continue over the year, given that the global economy will probably grow at a similarly strong rate in 2011 to last year, at 4.3 percent.”

Germany, the world’s second biggest exporter after China, was not dependent on Asia, Rondorf said, and exports “together with investment in machinery and equipment will remain the main driver of strong growth in Germany this year.”

Commerzbank forecast German economic growth of 3.0 percent in 2011, compared with a government estimate of 2.3 percent that could be revised next week.

On Thursday, leading German economic institutes said they expected the economy to expand by 2.8 percent this year.

AFP/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.

READ ALSO:

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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