German exports and imports drop more than expected in February
German imports and exports fell more than expected in February, according to data released by Destatis on Monday.
Exports declined 1.3% on the previous month while imports were down 1 .6% compared to January. Analysts had pencilled in a 0.5% drop in exports and a 0.7% fall in imports. On the year, exports rose 3.9% while imports were up 5.1%.
The trade surplus ticked up to €18.7bm from a revised €18.6bn in January, versus expectations for it to narrow to €18bn.
Carsten Brzeski, chief economist at ING Germany, said the German export sector is still wrestling with global uncertainty, highlighting problems in emerging markets, trade tensions between the US and China, US protectionism, a possible cooling of the Chinese economy and increasing fears of a hard Brexit.
"There simply seem to be too many crises in global trade for the German export sector to defy all of them at the same time. Another factor, which was somewhat underestimated in 2018, was the exchange rate. Despite the euro’s weakness vis-à-vis the US dollar, Germany’s real effective exchange rate had appreciated significantly since the start of 2017 on the back of falling emerging market currencies. The currency tailwind German exporters experienced between 2015 and early 2017 had turned into a headwind."
Brzeski added that while the trade data is yet another disappointment for the German economy, chances are high that the February disappointments simply came at the trough of global uncertainties and that some improvement is in the offing.