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TRADE

German trade increases more than expected

Germany's trading activity got off to a strong start this year with exports and imports rising in January, official data showed on Monday.

German trade increases more than expected
Photo: DPA

Europe’s biggest economy exported €91.9 billion ($119.6 billion) worth of goods in calendar and seasonally-adjusted terms in January, an increase of 1.4 percent from December, the national statistics office Destatis said.

That was much better than the 0.5 percent increase that analysts had been expecting. Imports rose even faster, adding 3.3 percent to €76.2 billion.

That meant the seasonally-adjusted trade surplus declined to €15.7 billion in January from €16.9 billion in December, statisticians calculated.

On a 12-month basis, the unadjusted trade surplus expanded slightly to €13.7 billion in January compared with €13.2 billion a year previously, as exports grew by 3.1 percent year-on-year while imports advanced by 2.9 percent, Destatis said.

While exports to eurozone countries edged up only 0.4 percent, imports from Germany’s eurozone partners rose by 2.8 percent.

And that, for Berenberg Bank economist Christian Schulz, suggested that a healthy rebalancing of trade within the single currency area was underway, with Germany now halving its trade surplus with its eurozone partners since 2008.

“Germany is helping its friends,” Schulz said.

“German domestic demand is one of the stabilising forces in the eurozone’s adjustment crisis. Stronger German demand allows the eurozone crisis economies to export more to Germany,” Schulz argued.

Natixis economist Johannes Gareis also welcomed the better-than-expected trade data.

“In seasonally adjusted terms, German exports surprised to the upside and German imports surprised even more,” he said.

“All in all, January’s slight increase in exports is good news for German growth in the first quarter in 2013. The rise in imports should be interpreted as a good sign, too, as it indicates that German domestic demand is quite robust amid the euro zone crisis,” the expert said.

AFP/hc

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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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