German exports fell by 1,5% in July in the latest sign that growth in Europe’s largest economy is slowing. Growth in industrial orders also slowed.
Exports powered Germany’s climb out of last year’s deep recession and remain almost 19 per cent higher than a year before.
Even if German growth slows over the rest of the year, economists generally do not expect a double-dip back into recession. Although worries have grown about the outlook for the US economy, demand for German exports from Asia is expected to remain robust.
Germany’s recovery had also broadened beyond exports. The figures showed imports had risen faster over the past year. In July, imports were almost 25 per cent higher than a year before, although compared with the month before they were down 2.2 per cent. The year-on-year increase was probably the result of a surge in goods and materials imported to manufacture products that were then exported, but it could also have reflected a pick-up in domestic demand.
Germany’s economy will feel the impact of the fiscal austerity programmes, compounded by the weakness of the southern European economies worst hit by this year’s crisis over public finances.
The German Bank problems are far from over with the announcement of the need to raise over $100bn to meet capital adequacy requirements.
Author: Graeme King
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