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German exports boosted by surging trade with China

German exports

German imports rose 3.6% after dropping 3.5% in the previous month

German exports rose in February, boosted by surging trade with China in a fresh sign that factories are busy in Europe’s largest economy despite a sharp drop in trade with the UK after Brexit.

Seasonally adjusted exports rose by 0.9% on the month after an upwardly revised rise of 1.6% in January, the Federal Statistics Office said on Friday.

German imports rose 3.6% after dropping 3.5% in the previous month.

A Reuters poll had pointed to a 1% rise in exports and a 2.4% rise in imports. The trade surplus shrank to €19.1 billion, today’s figures show.

On the year, exports to China increased by 25.7%.

But German exports to the UK dropped by 12.2% on the year in February and imports slumped 26.9%, the German Federal Statistics Office said. Germany is the UK’s biggest trading partner.

Exports to other EU states fell 0.3% on the year and imports rose 0.7%.

The UK left the European Union’s single market at the end of last year, raising barriers to trade.

That final split followed more than four years of wrangling over its terms of exit from the EU, during which German businesses had already begun to reduce their interactions with Britain.

German companies are benefiting from strong foreign demand – even if there are setbacks at the moment, things tend to look good for German industry, Thomas Gitzel at VP Bank said.

Separate data released today showed that German industrial output in February dropped by 1.6%. A Reuters poll had pointed to a rise of 1.5%. Economists expect the economy to contract in the first quarter.

What is currently weighing on German industry is not a lack of demand, it is rather supply bottlenecks for raw materials and components, Andreas Scheuerle at DekaBank said.

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