PRODUCT PROFILE

Latest Dublin Prices

German trade surplus soars in 2012

Friday, February 08 12:11:05

Germany's trade surplus was the second highest in more than 60 years in 2012, pointing to an underlying resilience in Europe's largest economy, although both imports and exports disappointed in the last month of the year.

Exports rose just 0.3 percent in December from November, compared with a forecast rise of 1.3 percent, and imports fell 1.3 percent against expectations for a rise of 1.4 percent .

Analysts blamed poor demand from the euro zone and beyond for the weakness of exports, and Germans' reluctance to spend for the fall in imports, but pointed to signs of recovery ahead, including a 0.8 percent rise in December industrial orders.

"Imports fell noticeably in December but were stronger then exports over the entire quarter, which really weighed on economic growth," said economist Andreas Scheuerle at Deka Bank.

"Looking forward the sky is brightening. Global early indicators have improved noticeably and give hope that export business will improve again."

Germany's economy shrank by 0.5 percent in the last three months of 2012 - its worst quarterly performance since a recession amid the global financial crisis in 2008/2009.

Most economists expect it to grow, albeit weakly, in the first quarter of this year and therefore escape recession, defined as two consecutive quarters of contraction.

But its ability to recover more strongly will be of crucial importance to Europe's hopes of emerging from four years of debt crisis and recession.

"We went through a period of weakness in exports in the second half of the year. If we look at industrial orders, it seems we are at a turning point," said Citigroup economist Juergen Michels.

"But even though the latest industrial orders show positive numbers from the ... euro zone, we assume the main part of the recovery will come from countries beyond the euro zone. Demand is especially strong in the USA and China. That will be dampened by the euro."

The trade surplus rose to 16.8 billion euros in December from an upwardly revised 15.6 billion in November, surpassing the consensus forecast in a Reuters poll for a surplus of 14.8 billion euros. (C ) Reuters