German exports plummet €5 billion in August

German exports plummet €5 billion in August
Photo: DPA
Destatis on Thursday blamed the timing of the school holidays for the sharpest drop in exports in more than five years. The news has dampened forecasts for Europe's biggest economies.

A sharp drop in German exports caused the country's trade surplus to contract in August, but largely due to the timing of the summer school holidays, official data showed on Thursday.

Exports shrank by 5.8 percent in August, cutting the trade surplus, the balance between imports and exports, the federal statistics office Destatis calculated in a statement.

It was the sharpest drop in exports since January 2009, a spokesman for Destatis said.

In seasonally adjusted terms, Germany exported goods worth a total of €92.6 billion in August, down from €98.3 billion in July, said Destatis.

Imports, on the other hand, shrank by just 1.3 percent to €75.1 billion.

That meant the seasonally adjusted trade surplus, tumbled to €17.5 billion in August from €22.2 billion in July.

In unadjusted terms, the contraction was even more marked, with the trade surplus shrinking to €14.1 billion in August from a record €23.5 billion in July, Destatis said.

Germany's leading economic institutes slashed their forecasts for growth this year and next year and urged the government needed to increase spending in order to boost growth, on the heels of the Destatis announcement. 

The German economy, Europe's biggest, would grow by just 1.3 percent in 2014 and 1.2 percent in 2015, the institutes predicting, much less than the 1.9 percent and 2.0 percent they had previously expected.

"Economic growth in Germany has cooled noticeably," the institutes said in their widely watched half-yearly report.

"After gross domestic product contracted in the second quarter and likely stagnated in the third quarter, the economic engine is finding it difficult to get going," the report said.

Domestic demand was weak, with the consumer climate deteriorating and companies continuing to scale back investment.

And foreign demand was also weak, with "only sluggish growth in the global economy and slowing momentum in the euro area," the institutes said.

The European Central Bank was "trying its best to stimulate the eurozone economy and interest rates are very low in Germany as a result.

"However, the latest raft of measures are unlikely to provide any additional impulses for the economy," the institutes warned.

The government should therefore increase spending in the public sector, the experts believed.

"On the spending side, public spending should be increased in those areas that can  potentially boost growth," the report said.

SEE ALSO: How rocky is Germany's economy?

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