German exports up 1.6 per cent


Trade with countries outside the euro zone drove German exports higher for the second month running in February, defying expectations of a fall, but its overall trade surplus still fell on the back of higher imports.

Data from the Federal Statistics Office today showed exports rose a seasonally adjusted 1.6 per cent, beating forecasts for a slight decline.

Imports increased by 3.9 per cent, narrowing the trade surplus to €13.6 billion and reflecting a domestic economy expected to bounce back faster this year than most of its struggling euro zone neighbours.

"More and more, the German economy's destiny is in the hands of its trading partners outside the euro zone," said Carsten Brzeski, an economist at ING in Brussels.

"The main drivers of Germany's export engine are currently non-euro zone countries: the (United States), the UK and China."

Germany, which accounts for almost 40 per cent of the euro zone's overall exports, recovered more quickly than others from the 2008/09 financial crisis and has stood strong throughout the two-year old debt crisis, in which others are hurt by government budget cuts and rising unemployment.

But the news of rising exports and imports came after data showing a bigger-than-expected drop in industrial output in February, renewing concerns that Germany may be flirting with a technical recession.

In February, German exports to non-euro zone countries within the European Union were 9.7 per cent higher than a year ago. To non-EU countries, exports were 13.4 per cent than in February 2011, the data showed.

The seasonally-adjusted trade surplus narrowed to €13.6 billion from a revised €15.1 billion in January.

The German economy shrank by 0.2 per cent in the fourth quarter on weakening exports and private consumption. But economists still on balance expect it will avoid a contraction in the first quarter of this year and therefore shrug off a recession, defined as two successive quarters of negative growth.