Friday, 25 Sep 2020

German July trade figures point to slow recovery

BERLIN (Reuters) – German exports remained far below their pre-crisis levels in July despite a 4.7% increase during the month, data published on Tuesday showed, adding to signs that Germany’s economic recovery from the coronavirus will be slow.

Imports rose by only 1.1% on the month, taking the seasonally adjusted trade surplus to 18 billion euros, the Federal Statistics Office said.

The data add to expectations that Europe’s biggest economy will return to growth in the second quarter helped by a return to pre-crisis activity levels domestically and in some of Germany’s main trading partners.

Yet weak demand from major economic peers such as the United States still grappling with the pandemic is holding back a stronger recovery.

The data showed that exports to the United States were 17% lower in July year-on-year. Exports to China, however, which is experiencing a more pronounced recovery that the United States, were only 0.1% lower.

“While today’s numbers are good news for our call of surging GDP growth in the second quarter and suggest that the export sector is flourishing again, we should not get carried away by these numbers,” said Carsten Brzeski, euro zone chief economist at ING.

He added: “They are still part of the mechanical rebound. In fact, the German export sector is still suffering from structural challenges including trade tensions, Brexit and global supply chain disruptions as well as difficulties among its main trading partners to cope with the virus.”

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