Germany: Some Relief but No Reason to Cheer - ING
Carsten Brzeski, Chief Economist at ING, notes that the German exports
recovered in February, but the revival was too weak to get overly
excited and it will take a while before exports can return as powerful
growth engine.
Key Quotes
“February
trade data just showed that the German export sector still struggles to
gain momentum. After four declines in the last six months, German
exports increased by 1.3% MoM in February. As imports only increased by
0.4% MoM, from 1.3% MoM in January, the seasonally-adjusted trade
balance improved to 20.3 bn euro, from 13.4 bn in January.
German
exports have lost parts of their magic and strength. In the past always
a reliable growth engine, net exports on average did not contribute
anything to quarterly GDP growth over the last two years. In 2015, net
exports even were a drag on growth. So much about export world champion.
Looking ahead, it does not look as if exports would quickly
return as a powerful growth engine. Foreign orders have dropped by more
than 7% since last summer, further reflecting a broader weakness in
Germany’s main trading partners. Moreover, the tailwinds of the weak
currency are also fading away.
With strong consumption, a
booming construction sector but stagnating industry and exports as well
as a reprimand from international institutions to finally step up reform
efforts, the Eurozone’s largest economy is losing some of its luster.
Admittedly, it is a bit tongue in cheek, but after this week’s macro
data, one could even start to think the Eurozone periphery these days
starts in Germany.”
(Market News Provided by FXstreet)
