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03/10/2010

German exports unexpectedly fell by 6.3 percent in January from the previous month, according to data released on Wednesday that run counter to economists' forecasts of an export-led recovery.

By contrast, Chinese exports jumped 45.7 percent in February, the biggest increase in three years. China replaced Germany as the world's biggest exporter in 2009. Germany had proudly held the unofficial title of "export world champion" since 2003.

Germany's traditional export strength lies in heavy machinery, automobiles and chemicals, and economists expect German sales abroad to be boosted by the sharp depreciation of the euro in currency markets this year, which makes the country's goods cheaper outside the 16-nation euro zone.

Stefan Bielmeier, an economist at Deutsche Bank, said exports must have been hit by extraordinary factors in January. "The figures don't fit in with the picture generated by other economic indicators. The purchasing managers' index and Ifo survey had indicated a recovery in export industries," he said.

Recovery Seen Intact

German imports in January increased by 6.0 percent from December, and the trade surplus narrowed to €8.0 billion in January from €13.4 billion in December, the Federal Statistics Office said. The last time German exports fell month-on-month was in August 2009.

Simon Junker, an economist at Commerzbank, said: "I can't say exactly what happened there. I'm surprised that the figures are so bad. Domestic demand seems to be good if imports rose so strongly. That's the only positive element that can be drawn from the data."

He said the figures were a disaster and didn't suggest that foreign trade would contribute to economic growth. "But we still expect the first half will be strong," said Junker. "Maybe not the first quarter. We expect exports to grow again in the coming months."

Europe's largest economy is recovering only slowly from its worst downturn since World War II in 2009. Economic growth may grind to a halt in the first quarter of this year as a result of the harsh winter weather which has hit construction and consumer spending.

Bundesbank President Axel Weber had warned on Tuesday that cold winter may even cause the economy to contract in the first quarter. But he added that the recovery that had begun last summer remained intact. "I am convinced that the recovery process begun in summer 2009 is basically intact and will continue despite the weak momentum in the winter half-year," he told a news conference.